previous years’ figures include exceptional items. · 3 dinshaw vachha road churchgate mumbai 400...

Previous years’ figures include exceptional items.

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Rallis India Limited

RALLIS

Sixty-first annual report 2008-2009

ContentsBoard of Directors 2

Chairman’s Statement 3-5

Notice of Meeting 6-8

Explanatory Statement 9-12

Directors’ Report 13-19

Management Discussion and Analysis 20-25

Report on Corporate Governance 26-39

Auditors’ Report 40-43

Balance Sheet 44

Profit and Loss Account 45

Cash Flow Statement 46-47

Schedules 1 to 20 48-74

Balance Sheet Abstract 75

Statement under Section 217 (2A) 76

Statement under Section 212 104

Financial Statistics 105

Book CLoSuRe DAteS

14th MAy, 2009 to 29th MAy, 2009

Annual General Meeting : Friday, 29th May, 2009

time : 3.30 p.m.

Venue : Walchand hirachand hall, 4th Floor, Indian Merchants’ Chamber Building,IMC Marg, Churchgate, Mumbai 400 020.

Consolidated Financial Statements

– Auditors’ Report 77

– Balance Sheet 78

– Profit and Loss Account 79

– Cash Flow Statement 80-81

– Schedules 1 to 20 82-103

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Board of Directors

R. Gopalakrishnan (Chairman)

Homi R. khusrokhan

B. D. Banerjee

e. A. kshirsagar

S. Ramanathan

Prakash R. Rastogi

Bharat Vasani

Venkatrao S. Sohoni

k. P. Prabhakaran Nair

V. Shankar (Managing Director & CEO)

Registered office

Apeejay house 7th Floor

3 Dinshaw Vachha Road

Churchgate Mumbai 400 020

tel. No. 6665 2700

Fax No. 6665 2827

E-mail address: [email protected]

Website: www.rallis.co.in

GM – Legal & Company Secretary

P. S. Meherhomji

Auditors

Deloitte haskins & Sells

Solicitors & Advocates

Crawford Bayley & Company

executive team

V. Shankar Managing Director & CEO

A. K. Shetty Chief Operating Officer – Agri Business

D. K. Sundar Executive Vice President – Finance & Legal

B. S. Uberoi Executive Vice President – Corporate Affairs

K. Nagraj Executive Vice President – Technology & Business Development

K. Amuthan Vice President – Human Resources & Business Excellence

Shashi Kapoor Chief Internal Auditor

S. K. Chaturvedi Vice President – Domestic Sales

R. R. Joshi Vice President – Manufacturing

K. R. Venkatadri Vice President – International Business

Share Registrars and transfer Agents

tSR Darashaw Ltd.

6-10 haji Moosa Patrawala Industrial Estate,

20 Dr. E. Moses Road,

Mahalaxmi,

Mumbai 400 011.

tel. No. 6656 8484

Fax No. 6656 8494

E-mail address: [email protected]

Website: www.tsrdarashaw.com

Bankers

State Bank of India

Citibank N.A.

Corporation Bank

BNP Paribas

Industrial Development Bank of India Limited

Axis Bank Limited

ICICI Bank Limited

oriental Bank of Commerce

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CHAIRMAN'S StAteMeNt

Dear Shareholders,

I am sure you will be pleased to know that your Company has crossed Rs. 100 Crores PBt (before exceptional items) for the first time in its history. After incurring a loss a few years ago, this achievement gives great satisfaction to all the employees. I am sure it gives confidence to investors as well for higher achievements in the coming years. your Company, with the help of its very competent team of professionals, should continue on the path of growth in the coming years.

It would be of interest if I mention the three key competencies that exist in Rallis –

– Branded Farm Solutions: the ability to sell branded farm-solutions to farmers is a great corporate asset. Rallis has several decades of association with the Indian farmers. Rallis has pioneered a number of unique relationship-building initiatives like technical field agronomists for disseminating the latest practices for crop cultivation, using focused group discussions for understanding emerging requirements of farmers, and systematically chalked field campaigns.

– Market Reach: the ability of Rallis to deliver new farm-solutions efficiently into the market is regarded as a great strength within the Indian industry. Rallis has a strong distribution network and is present across the length and breadth of the country, covering all the crop geographies. Rallis’ channel partners reach out to roughly 40,000 retailers across the country with presence in more than 80% of India’s districts.

– Technical Innovative Capabilities: Rallis has a deep understanding of organic chemistry, batch processing and special chemical reactions such as Isomerisation, Azolyl Methylation and Reductive Alkylation. Further, it has invested in developing low-cost manufacturing solutions for generic molecules.

the general economic situation across the world is very tough. Long term investors will view the prospects of the Company within this general context and within the context of the Industry. I would like to address both before I speak about the Company –

a. Global economic Situation

the year 2008-09 was a volatile year for all economies, which experienced disequilibrium across the globe. In the first half of the financial year, the trend of the previous years continued–of surging consumer demand, production increase and rising raw material prices.

however, during the second half of the year all these factors seemed to collapse. Economic recession coupled with liquidity problems emerged in many countries impacting all business sectors.

Countries like US, UK, Japan and many others continue to be in recession. the recession is expected to continue through the end of 2009 with only early signs of a turnaround by 2010.

the Indian economy has also been impacted by the global crises. however, the negative impact of the crisis has been comparatively less harsh than many other countries. the GDP growth for Apr-Dec ’08 stood at 6.9% (9% for Apr-Dec ’07).

b. Robust Prospects for Agriculture

Globally, between 1974 and 2005, food prices declined by about 75% in real terms (Constant $). Since 2005, food prices rose rapidly, only to be interrupted in second half of 2008 due to the global economic downturn. however the world is expected to be in for a firm to rising food prices situation in the coming years.

If the average price forecast by oECD-FAo for 2008-2017 is compared with that of 1998-2007, prices for wheat, maize and skim milk powder could be higher by 40-60%; for raw and white sugar by 30%, for butter and oilseeds by more than 60% and for vegetable oils by over 80%.

Increasing world population, growth in developing nations and increasing urbanization are spurring the demand for food. According to a report drafted for ministers of G8 nations, the world faces “a permanent food crisis and global instability unless countries act now to feed a surging population by doubling agricultural output”.

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on the supply side, there are many challenges posed due to the impacts of climate change on agriculture, land degradation, growing uncertainty about crop yields and the intensification of floods and droughts in tropical areas. this will lead to volatility in food prices. Food and Agricultural Policy Research Institute (FAPRI), International Food Policy Research Institute (IFPRI) and organisation for Economic Co-operation and Development (oECD) & Food and Agriculture organization (oECD-FAo) studies identify an increase in the volatility of food commodity prices for the next 10-15 years.

In India, during the period ’04-08, the agriculture growth at 4.2% per annum has been the highest since 1980. While the agri-input prices have been subsidized, the price realizations for crop output have increased in line with the global prices. the Government has helped to focus on helping the Indian farmer, placing greater emphasis on the economic well-being of farmers and rural development rather than merely on agricultural production. Improvement of rural infrastructure, expansion of irrigation area, improved water management, support for rural roads, housing, electrification, telecommunication and research have been given a high priority.

c. Crop Care Industry

Although traditionally our industry has been referred to as Pesticides or Agrochemicals, I would like to believe that we are in the business of Crop Care. therefore, I prefer to refer to our industry as the Crop Care industry.

the Crop Care industry is a very big industry globally at USD 40 Billion. Its size is impressive compared to consumer industries like Laundry Care (USD 65 Billion) and the Bath Care (USD 30 Billion). on this large base, the global Crop Care industry has grown at a CAGR of 8% over the last five years. this reflects a good demand for Crop Care products, driven by a fairly positive agricultural outlook throughout the globe and a general price increase for most of the generic products.

the domestic Crop Care industry (USD 1 Billion or Rs. 5000 Crores) witnessed a growth of around 10% during the year. this was largely driven by price increases, especially for the generic products. Steep cost escalation in the prices of raw materials led to such increases in the prices of the finished goods. however, prices were fairly stable for the specialty products and the industry witnessed a growing preference for such products by the farmers.

While first half of the year was relatively favorable for the domestic industry, the environment turned challenging during the second half of the year. Industry grappled with issues like declining product prices, high cost inventory carried over from first half, adverse impact of volatility in foreign exchange and liquidity crisis along with poor credit availability.

Performance of Southwest monsoon remains one of the critical drivers for the domestic Crop Care industry. While overall monsoon during the Kharif season remained normal, it was marked by temporal variations with many areas not receiving rains for long periods during the months of July and August. this resulted in changes in cropping patterns and farmers had to go for re-sowing in many areas especially in west and central India. Average yields in Kharif crops like Cotton, Soybean and Pulses were also adversely impacted because of this. the Rabi season witnessed low pest and disease occurrence in some key crops, whereas cyclonic rains in November impacted standing rice in tamil Nadu.

For the first time after 35 years, the global demand for food will outstrip supply. this comes at a time when land is not easily available. Productivity can be improved by focusing on – i. Better Inputs ii. Better Agronomic Practices iii. Post harvest efficiencies

your Company is involved in areas under (i) and (ii).

the above analysis points to a positive period ahead. Future writers may well perceive the coming period as the return of a golden period for agriculture, last seen during the green revolution half a century ago.

Company Performance and Plans

With continued focus on its key strategic drivers, your Company made significant progress during the year, inspite of the global economic slowdown.

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Some of the key features of your Company’s performance during the year were:

1. Focus on innovation and introduction of new products continues to be one of the key strategic pillars for the Company. While products launched in the previous years like Applaud and Takumi got strengthened further with good response from growers of key crops, the Company also launched a new blasticide in Paddy segment under the brand name of Mantis. two more new products, Ergon and Balwan are ready for launch in the coming year. Revenue from new products introduced in the last four years, termed as innovation turnover remained around 30% for the year.

2. the International Business achieved record sales of Rs. 288 Crores in 2008-09, a growth of about 79% over last year’s sales. this, inspite of the downturn in international markets. the Company’s focus on supply contracts and registration based sales has helped in increasing revenues across geographies.

3. your Company continued its drive towards cost reduction and productivity. An enterprise wide value creation programme has been instrumental in improving the profitability of operations. In addition to manufacturing, procurement, sales and marketing areas, the programme has also been extended to reducing fixed costs and overheads across the Company during the year.

4. the Company’s plans to set up additional manufacturing facilities are on track, with work progressing satisfactorily at the new site at Dahej in Gujarat, to which I had referred in my last year’s statement to the shareholders. the Rs. 150 Crores of investment in Phase 1 will go towards creating a state-of-the-art facility. the capacity of the plant will be 5000 Mt/KL per year with a Rs. 500 Crores revenue potential over a three year period. Commercial production is expected to start by June 2010.

5. your Company’s focus on health and safety measures also continued to be recognized. your Company received several recognitions at the National and State levels for excellence in health and Safety performance at all its Units.

6. your Company continued to enhance customer relationships through various initiatives, which include its unique Rallis Kisan Kutumba (RKK) initiative, Focus Group Discussions, 4S campaigns and farmer helplines. RKK initiative got further strengthened during the year with its farmer base expanding to 1,30,000 farmers across the country.

7. the Company continued to progress well on its journey in Business Excellence with its thrust on process orientation. During the year, your Company was awarded the CII-EXIM Award for Significant Achievement in Performance Excellence in its first year of application. the Company was also conferred the Growth Strategy Excellence Award in the Indian Crop Protection Chemicals Market by Frost & Sullivan, a consulting organization. your Company is the first recipient of this award in the Indian Crop Protection industry.

the above initiatives have resulted in strengthening the Company’s core capabilities during the year.

Board of Directors

During the year, your Company has inducted Dr. K. P. Prabhakaran Nair as an Independent Director on the Board. Dr. Nair is a renowned agronomist with over three decades of significant contributions in research, teaching and developmental areas. I am sure the shareholders will join me in welcoming Dr. Nair on the Board.

Acknowledgement

I would like to end by expressing my sincere appreciation for the continued support of the tata Group, shareholders, suppliers, commercial partners and employees during the year.

Chairman

MumbaiApril 22, 2009

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RALLIS INDIA LIMIteD

NotICe oF MeetING

NotICE is hereby given that the 61st Annual General Meeting of Rallis India Limited will be held at Walchand hirachand hall, 4th Floor, Indian Merchants’ Chamber Building, IMC Marg, Churchgate, Mumbai 400 020, on Friday, the 29th May, 2009 at 3.30 p.m. to transact the following business:

1. to receive, consider and adopt the audited Profit and Loss Account for the year ended 31st March, 2009 and the Balance Sheet as at that date together with the Report of the Directors and that of the Auditors thereon.

2. to declare a dividend on the 7.5% Cumulative Redeemable Preference Shares.

3. to declare a dividend on Equity Shares.

4. to appoint a Director in place of Mr. R. Gopalakrishnan who retires by rotation and is eligible for re-appointment.

5. to appoint a Director in place of Mr. B. D. Banerjee who retires by rotation and is eligible for re-appointment.

6. to appoint a Director in place of Dr. S. Ramanathan who retires by rotation and is eligible for re-appointment. he has offered himself for re-election and his term would be upto the end of June 2011.

7. to appoint Auditors and to fix their remuneration.

8. Appointment of Dr. k. P. Prabhakaran Nair as a Director

to appoint a Director in the place of Dr. K. P. Prabhakaran Nair who was appointed an Additional Director of the Company by the Board of Directors with effect from 1st September, 2008 and who holds office upto the date of this Annual General Meeting under Section 260 of the Companies Act, 1956 (‘the Act’) and Article 116 of the Articles of Association of the Company, but who is eligible for appointment and in respect of whom the Company has received a notice in writing under Section 257 of the Act from a shareholder proposing his candidature for the office of Director.

9. Appointment of Mr. V. Shankar as Managing Director

to consider and, if thought fit, to pass with or without modification, the following Resolution as an ordinary Resolution:

ReSoLVeD tHAt pursuant to the provisions of Sections 198, 269, 309, 311, read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 (‘the Act’), the Company hereby approves of the appointment and terms of remuneration of Mr. V. Shankar as the Managing Director of the Company with effect from 15th January, 2009 upto 12th March, 2012, upon the terms and conditions as set out below and in the Explanatory Statement annexed to the Notice conveying this meeting, with liberty to the Board of Directors (hereinafter referred to as ‘the Board’ which term shall be deemed to include any Committee of the Board constituted to exercise its powers, including the powers conferred by this Resolution) to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the Directors and Mr. Shankar.

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A. Remuneration:

Salary upto a maximum of Rs. 4,00,000 per month, with annual increments effective 1st April every year, as may be decided by the Board, based on merit and taking into account the Company’s performance; benefits, perquisites and allowances as determined by the Board from time to time; and incentive remuneration, if any, and/or commission based on certain performance criteria to be prescribed by the Board.

B. Minimum Remuneration:

Notwithstanding anything to the contrary herein contained, where in any financial year, the Company has no profits or its profits are inadequate, the Company will pay remuneration for a period not exceeding three years by way of salary, perquisites and allowances and incentive remuneration as specified above.

ReSoLVeD FuRtHeR tHAt the Board be and is hereby authorized to take all such steps as may be necessary, proper and expedient to give effect to this Resolution.

Notes:

1. the Explanatory Statement, pursuant to Section 173 of the Companies Act, 1956 in respect of the business under Item Nos. 8 and 9 above is annexed hereto. the relevant details of Directors seeking re-appointment/ appointment under Item Nos. 4 to 6 and 8 and 9 above, pursuant to Clause 49 of the Listing Agreements entered into with the Stock Exchanges are also annexed.

2. the Register of Members and the Share transfer Books of the Company will be closed from thursday, 14th May, 2009 to Friday, 29th May, 2009 (both days inclusive).

3. If dividend on Preference Shares and Equity Shares, as recommended by the Directors, is approved at the Meeting, the payment of such dividend will be made on or after 30th May, 2009 as under:

(a) to all Beneficial owners in respect of shares held in electronic form, as per details furnished by the Depositories for this purpose as on beginning of 14th May, 2009.

(b) to all Members in respect of shares held in physical form, whose names are on the Company’s Register of Members on 14th May, 2009.

(c) In respect of Preference Shares, dividend will be paid to the Beneficial owners of the shares as on 29th May, 2009 (record date), as per details furnished by the Depositories for this purpose.

4. to avoid loss of dividend warrants in transit and undue delay in receipt of dividend warrants, the Company has provided Electronic Clearing Service (ECS) facility to the Members for remittance of dividend. ECS facility is available at locations identified by Reserve Bank of India from time to time. Members holding shares in physical form and desirous of availing this facility are requested to contact the Company’s Share Registrars and transfer Agents, tSR Darashaw Ltd. Members holding shares in electronic form are requested to contact their respective Depository Participants.

5. Members holding shares in electronic form are hereby informed that bank particulars registered against their respective depository accounts will be used by the Company for payment of dividend. the Company or its Registrars cannot act on any request received directly from the Members holding shares in electronic form for any change of bank particulars or bank mandates. Such changes are to be advised only to the Depository Participant of the Members.

6. Members holding shares in physical form are requested to advise any change of address immediately to the Company’s Share Registrars and transfer Agents. Members holding shares in electronic form must send the

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advice about change in address to their respective Depository Participant only and not to the Company or the Company’s Share Registrars and transfer Agents.

7. As per the provisions of the Companies Act, 1956 facility for making nomination is available for the Members in respect of the shares held by them. Nomination forms can be obtained from the Company’s Share Registrars and transfer Agents.

8. Pursuant to Section 205A of the Companies Act, 1956, all unclaimed/unpaid dividends upto the financial year ended 31st March, 1995 have been transferred to the General Revenue Account of the Central Government. Members who have not yet encashed their dividend warrants for the said period are requested to forward their claims in Form No. II prescribed under the Companies Unpaid Dividend (transfer to General Revenue Account of the Central Government) Rules, 1978 to –

office of the Registrar of Companies, CGo Complex, A Wing, 2nd Floor, Next to Reserve Bank of India, CBD, BELAPUR 400 614.

Members are hereby informed that after the amendment of the Companies Act, 1956, w.e.f. 31st october, 1998, the Company is obliged to transfer any money lying in the Unpaid Dividend Account, which remains unpaid or unclaimed for a period of seven years from the date of such transfer to the Unpaid Dividend Account, to the credit of Investor Education and Protection Fund (’the Fund’) established by the Central Government. In accordance with Section 205C of the Companies Act, 1956, no claim shall lie against the Company or Fund in respect of the amounts transferred to the Fund.

Members who have not yet encashed their dividend warrant(s) for the financial year ended 31st March, 2002 and subsequent years, are requested to make their claims to the Company, without any delay. It may be noted that unpaid dividend for the financial year ended 31st March, 2002 is due for transfer to the Fund on 25th october, 2009.

9. As an austerity measure, copies of the Annual Report will not be distributed at the Annual General Meeting. Members are requested to bring their copies to the meeting.

10. A MeMBeR eNtItLeD to AtteND AND Vote At tHe MeetING IS eNtItLeD to APPoINt A PRoXY to AtteND AND Vote IN HIS SteAD AND A PRoXY NeeD Not Be A MeMBeR oF tHe CoMPANY. Proxies, in order to be effective, must be received at the Company’s Registered office not less than 48 hours before the meeting. Proxies submitted on behalf of companies, societies, partnership firms, etc. must be supported by appropriate resolution/authority, as applicable, issued on behalf of the nominating organization.

By order of the Board of Directors

P. S. MEhERhoMJI GM – Legal & Company Secretary

Dated: 15th April, 2009

Registered Office:

Apeejay house 7th Floor3 Dinshaw Vachha RoadChurchgate Mumbai 400 020

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eXPLANAtoRY StAteMeNt PuRSuANt toSeCtIoN 173 oF tHe CoMPANIeS ACt, 1956

Pursuant to Section 173 of the Companies Act, 1956 (‘the Act’), the following Explanatory Statement sets out all material facts relating to the business mentioned under Item Nos. 8 and 9 of the accompanying Notice dated 15th April, 2009.

Item No. 8:

Dr. K. P. Prabhakaran Nair was appointed Additional Director of the Company by the Board of Directors with effect from 1st September, 2008 pursuant to Section 260 of the Act and Article 116 of the Articles of Association of the Company. As such, he holds office as Director upto the date of this Annual General Meeting and is eligible for appointment. Notice under Section 257 of the Act has been received from a Member indicating her intention to propose Dr. Nair for the office of Director at the forthcoming Annual General Meeting.

Dr. Nair is a B. Sc in Agriculture and M. Sc in Agronomy from the tamil Nadu Agricultural University, Coimbatore, and Ph. D from Indian Agricultural Research Institute in New Delhi. he has done his Post-Doctoral Research from State University of Gent, Belgium. he has several academic distinctions, including Rockefeller Fellow, winner of Robertson Memorial Gold Medal for outstanding contributions in Agronomy and Senior Fellowship of the world-renowned Alexander von humboldt Research Foundation of the Federal Republic of Germany.

Dr. Nair has over three decades of research, teaching and developmental experience in Europe, Africa and Asia. he has held a number of positions of prestige, the most important being Professor, National Science Foundation, the Royal Society, Belgium; Professor and head, the University Center, Cameroon; Senior Professor, University of Fort hare, South Africa and Distinguished Visiting Scientist, Indian Council of Agricultural Research. he is a recipient of several national and international awards, of which the “First Runner Up” in 1999 and “Second Runner Up” in 2001 for the International Fertilizer Award are significant in the fertilizer industry for developing the revolutionary soil management technique, which is now globally known as “the Nutrient Buffer Power Concept”. he is the world’s only agricultural scientist to have been invited to write chapters four times to “Advances in Agronomy”, the magnum opus of agricultural science.

the Board considers it desirable to continue to receive the benefit of Dr. Nair’s advice and guidance and of his expertise on agriculture and, therefore, commends his appointment.

Dr. K. P. Prabhakaran Nair is interested and concerned in the Resolution mentioned in Item No. 8 of the Notice.

Item No. 9:

At the Annual General Meeting held on 25th May, 2007, the Members of the Company had approved of the appointment and terms of remuneration of Mr. V. Shankar as Executive Director of the Company for a period of five years from 13th March, 2007.

the Board of Directors at their meeting held on 15th January, 2009, subject to the approval of the Members, appointed Mr. V. Shankar as the Managing Director of the Company, with immediate effect. Mr. Shankar joined Rallis India Limited on 1st December, 2005 as Chief operating officer. he was appointed as Executive Director of the Company with effect from 13th March, 2007. Mr. Shankar was redesignated CEo & Executive Director of the Company with effect from 1st June, 2007. As CEo & Executive Director, Mr. Shankar exercises substantial powers of management over the Company, subject to the superintendence, control and directions by the Board of Directors.

Prior to joining Rallis, Mr. Shankar had worked with tata Chemicals Ltd. as Chief operating officer, Phosphates Business, before which, he was with hindustan Lever Ltd. from 1986 to 2004. While in hindustan Lever, he served

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in various capacities in the Commercial function and was also head of the Seeds as well as Fertiliser businesses. Mr. Shankar is a Chartered Accountant, Cost Accountant, Company Secretary as well as a Law Graduate.

the appointment and terms of remuneration of Mr. Shankar as the Managing Director are pursuant to the provisions of Article 135 of the Company’s Articles of Association and Sections 198, 269, 309, 311, read with Schedule XIII and other applicable provisions, if any, of the Act. Mr. Shankar shall not, while he continues to be the Managing Director, be subject to retirement by rotation pursuant to the provisions of Section 255 of the Act.

Besides the terms and conditions for payment of managerial remuneration as contained in the Resolution at Item No.9, the other main terms and conditions relating to the appointment of Mr. Shankar as Managing Director, as approved by the Board at its Meeting held on 15th January, 2009, are given below:

1. the Managing Director shall devote his whole time and attention to the business of the Company and carry out such duties as may be entrusted to him by the Board from time to time and separately communicated to him and exercise such powers as may be assigned to him, subject to superintendence, control and directions of the Board in connection with and in the best interests of the business of the Company and the business of any one or more of its associate companies and/or subsidiaries, including performing duties as assigned by the Board from time to time by serving on the boards of such associate companies and/or subsidiaries or any other executive body or any committee of such a company.

the Managing Director shall employ the best of his skill and ability to make his utmost endeavours to promote the interests and welfare of the Company and to conform to and comply with the directions and regulations of the Company and all such orders and directions as may be given to him from time to time by the Board.

2. the terms and conditions of the appointment of the Managing Director may be altered and varied from time to time by the Board as it may, in its discretion deem fit, irrespective of the limits stipulated under Schedule XIII to the Act or any amendments made hereafter in this regard in such manner as may be agreed to between the Board and the Managing Director, subject to such approvals as may be required.

3. the Managing Director will not, during the continuance of his employment with the Company, without the prior written consent of the Board, carry on or be engaged, directly or indirectly, either on his own behalf or on behalf of any person, or as manager, agent, consultant or employee of any person, firm or company, in any activity or business, in India or overseas, which shall directly or indirectly be in competition with the business of the Company or its subsidiaries or associate companies.

4. the Managing Director, so long as he functions as such, will not become interested or otherwise concerned, directly or through his spouse and/or children, in any selling agency of the Company.

5. the Managing Director shall, during his term, abide by the provisions of the tata Code of Conduct in spirit and in letter and commit to assure its implementation.

6. All Personnel Policies of the Company and the related Rules which are applicable to other employees of the Company shall also be applicable to the Managing Director, unless specifically provided otherwise.

7. the Agreement may be terminated by either party by giving the other party six months’ notice of such termination or the Company paying six months’ remuneration in lieu of such notice.

8. Upon the termination by whatever means of his employment under the Agreement:

(i) the Managing Director shall immediately tender his resignation from other offices held by him in any subsidiaries and associate companies without claim for compensation for loss of office and in the event of his failure to do so the Company is irrevocably authorized to appoint some person in his name and

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on his behalf to sign and deliver such resignation or resignations to the Company and to each of the subsidiaries and associate companies of which the Managing Director is at the material time a director or other officer.

(ii) the Managing Director shall not without the consent of the Company at any time thereafter represent himself as connected with the Company or any of the subsidiaries and associate companies.

9. (i) the Managing Director is being appointed by virtue of his employment in the Company and his appointment shall be subject to the provisions of Section 283(1) (I) of the Act.

(ii) If and when the Agreement expires or is terminated for any reason whatsoever, Mr. V. Shankar will cease to be the Managing Director and also cease to be a Director. If at any time, the Managing Director ceases to be a Director of the Company for any reason whatsoever, he shall cease to be the Managing Director and the Agreement shall forthwith terminate. If at any time, the Managing Director ceases to be in the employment of the Company for any reason whatsoever, he shall cease to be a Director and Managing Director of the Company.

An abstract of the draft agreement between the Company and Mr. Shankar pursuant to the provisions of Section 302 of the Act was sent to the Members in January, 2009.

Pursuant to the provisions of Sections 198, 269, 309, 311, Schedule XIII and other applicable provisions of the Act, the approval of the Members in General Meeting is required to be obtained for the appointment and the terms of the remuneration of Mr. Shankar as the Managing Director and as set out in Item No. 9 of the Notice.

Mr. V. Shankar is concerned or interested in the Resolution mentioned at Item No. 9 of the Notice.

the Board is of the opinion that it is in the interest of the Company to continue to receive the benefit of Mr. Shankar’s services as Managing Director and accordingly the Directors commend the Resolution at Item No. 9 for approval by the Members.

By order of the Board of Directors

P. S. MEhERhoMJI GM – Legal & Company Secretary

Dated: 15th April, 2009

Registered Office:

Apeejay house 7th Floor3 Dinshaw Vachha RoadChurchgate Mumbai 400 020

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13

DIReCtoRS’ RePoRt

to tHe MeMBeRS oF RALLIS INDIA LIMIteD

the Directors hereby present their Sixty-first Annual Report on the business and operations of the Company and the financial accounts for the year ended 31st March, 2009.

FINANCIAL ReSuLtS

Rs. Crores

2008-09 2007-08

Gross Sales 906.84 739.66Excise Duty (73.99) (68.59)

Net Sales 832.85 671.07other Income* 22.62 111.63

855.47 782.70

Profit/(-) Loss before Interest, Depreciation and tax 132.22 170.33Interest (3.26) (4.09)Depreciation (22.95) (20.07)

Profit/(-) Loss before tax 106.01 146.17Provision for tax (29.34) (20.33)Fringe Benefit tax (1.72) (1.66)For Prior years (reversed) (0.59) –Deferred tax (3.07) 1.01

Profit/(-) Loss after tax 71.29 125.19Balance of Profit brought forward from previous year 149.20 66.68

220.49 191.87

Appropriationstransfer from/(to) General Reserve (7.13) (12.52)Proposed Preference Dividend (6.60) (6.60)Income tax on Preference Dividend (1.12) (1.12)Proposed Equity Dividend (19.17) (19.17)Income tax on Equity Dividend (3.26) (3.26)Balance Profit/(-) Loss carried forward to Balance Sheet 183.21 149.20

* other Income includes profit on sale of land Rs. Nil (Previous Year Rs. 87.42 Crores).

DIVIDeND

the Directors are pleased to recommend a dividend of 160% on the Equity Shares of the Company (Previous Year 160%). Dividend is also recommended on the 7.5%, Cumulative Redeemable Preference Shares of the Company.

14

RALLIS



CoMPANY PeRFoRMANCe

the Company’s profit from operations on a consolidated basis, increased to Rs. 119.53 Crores during the year, as compared to Rs. 65.43 Crores in the previous year, a growth of 83% over the last year. the Company earned a net profit of Rs. 72.02 Crores, as against a net profit of Rs. 125.31 Crores in the previous year on consolidated basis. Previous year’s net profit included profit after tax of Rs. 67.58 Crores from the sale of land.

oPeRAtIoNS

Crop Protection Chemicals

the crop protection industry experienced a turbulent year due to several factors, chief among them being uncertainties of monsoon, fluctuating finished product price due to variable raw material costs, foreign exchange fluctuations, unavailability of raw materials in time. out of 36 meteorological subdivisions, 92% of the country’s area comprising 32 meteorological subdivisions received excess/normal rainfall; however it was marked by large temporal variations.

Rainfall over the country as a whole was 24% above Long Period Average (LPA) during June and 17% below LPA in July. It resulted in loss to farmers as they had to go for resowing of alternate crops, especially in western and central India. yields also got adversely impacted due to lack of moisture at critical growth stages in crops like cotton, soybean and pulses.

our domestic formulation business registered a growth of 10% during the year over the previous year despite these market adversities. Well planned moves helped in significantly improving volumes in the domestic market for key products such as Applaud, Contaf Plus and Fujione. takumi, our new technology insecticide launched in the previous year received excellent response from Pulses and Rice growers.

During the year, your Company has taken several initiatives to strengthen farmer contact programmes. the Company has reinvigorated programmes like Bhagidari Sabhas towards strengthening the relationship with channel partners who are vital links to the farmers. our farmer relationship programme Rallis Kisan Kutumba received a major emphasis during the year, with its farmer base expanding to one lakh and thirty thousand farmers across the country.

the International Business registered a growth of about 79% over last year’s sales. the strong growth was on account of increased sales of key molecules identified under the International Business growth programme, APoLLo and increasing our share of key customers’ basket through strengthening of customer relations. Growth was registered in all the key products.

the Domestic Institutional Business continued with its sales to major customers and products during the year, inspite of availability constraints in some products and some difficult market conditions.

Seeds and Plant Growth Nutrients

your Company has progressed its seeds business through distribution of Bt II Cotton seeds known for multiple resistance to a variety of caterpillar pests.

During the coming year, the Company plans to expand its hybrid paddy portfolio. Expansion of product portfolio is also envisaged by entering into marketing of maize seeds.

In the Plant Growth Nutrient segment, your Company’s initiative of product rationalization and focusing on high value creating products has yielded good results. the performance of the Plant Growth Nutrient business improved during the year. the Company has included RALLIZyME and RALLI GoLD in its range for addressing the growing demand for improving plant health and quality of produce.

Leather Chemicals

Leather Chemicals sales, including export of myrobalan extract, in 2008-09 was lower by 25%, as compared to 2007-08 and gross margins were lower by 9% due to a slump in leather business activity.

15

ReSeARCH & DeVeLoPMeNt

there was continued progress in the NMItLI (New Millennium Indian technology Leadership Initiative) project. Eight lead molecules were identified as Fungicides and are being evaluated on major crop diseases under field conditions for further development. the application for the new molecules developed under “NMItLI Project” is filed through CSIR (Council of Scientific and Industrial Research), New Delhi, for getting the patent.

Developing new formulations and combinations to ensure better efficacy and differentiation are focus areas under Research and Development. Number of new formulations and combinations are at various stages of development. A number of registration dossiers have been submitted during the year.

ADDItIoNAL MANuFACtuRING FACILItY

the Company’s plans to set up additional manufacturing facilities are on track. Foundation stone laying ceremony was conducted in January at its new facility at the SEZ site at Dahej in Gujarat. Work is progressing satisfactorily and the Company expects to commence commercial production from the new facility by June 2010. the Dahej plant will be a multi-purpose technical manufacturing facility for a number of crop protection products.

INDuStRIAL ReLAtIoNS

harmonious industrial relations prevailed at all Units of the Company during 2008-09.

the Company had, during the year, announced a Voluntary Retirement Scheme (VRS) for all employees at its Patancheru Unit, near hyderabad in the State of Andhra Pradesh. the VRS was accepted by all workers at the Unit and the manufacturing operations at the Unit have since been discontinued.

the overall manpower of the Company reduced from 1016 to 891 during the year.

SuBSIDIARY

the Company has been granted exemption by the Ministry of Corporate Affairs, from attaching with its accounts, the individual accounts of its subsidiary, Rallis Australasia Pty Ltd. however, the Consolidated Financial Statements of the Company and its Subsidiary (prepared in accordance with Accounting Standard 21 issued by the Institute of Chartered Accountants of India), form part of the Annual Report and are reflected in the Consolidated Accounts of the Company. Further, as directed by the Ministry of Corporate Affairs, the financial data of the subsidiary have been furnished under “Summary of Financial Information of Subsidiary Company” and forms part of this Annual Report. the annual accounts of the subsidiary and related detailed information will be kept at the registered office of the Company and will be available to investors seeking information at any time.

DIReCtoRS

Dr. K. P. Prabhakaran Nair has been appointed as Additional Director of the Company with effect from 1st September, 2008. Pursuant to Section 260 of the Companies Act, 1956 and Article 116 of the Articles of Association of the Company, Dr. K. P. Prabhakaran Nair vacates office and is eligible for appointment.

the Board of Directors at their meeting held on 15th January, 2009, subject to the approval of the Members, appointed Mr. V. Shankar as the Managing Director of the Company, with immediate effect. Members are requested to refer to Item No. 9 in the Notice of the Annual General Meeting for the terms of appointment and remuneration of Mr. Shankar.

In accordance with Article 112(2) of the Articles of Association of the Company, Mr. R. Gopalakrishnan, Mr. B. D. Banerjee and Dr. S. Ramanathan retire and are eligible for re-appointment.

DIReCtoRS’ ReSPoNSIBILItY StAteMeNt

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representations received from the operating Management, confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

16

RALLIS



(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied them consistently, and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis.

CoRPoRAte GoVeRNANCe AND INteRNAL AuDIt

Besides continuing the usage of expertise of a single large firm of Internal Auditors, the Internal Audit Department, under the direction of the Chief Internal Auditor, also undertook a substantial number of internal audits by using internal resources, with a view to encompassing a larger universe. the benefits through this twin-pronged approach resulted in providing more assurance on compliance and sustenance in internal controls. Besides, this approach has also helped in establishing an evolving partnership with the various Function owners.

the Enterprise Risk Management framework, as well as the CEo/CFo Certification as required under Clause 49 of the Listing Agreement with Stock Exchanges, for controls testing pertaining to financial reporting, were well established.

A Report on Corporate Governance, as required under Clause 49 of the Listing Agreement is annexed.

AuDItoRS

At the Annual General Meeting, Members will be required to appoint Auditors for the current year and fix their remuneration. M/s. Deloitte haskins & Sells, the existing Auditors have furnished a certificate regarding their eligibility for re-appointment. the Directors recommend that they be re-appointed as Auditors of the Company for the current year.

CoSt AuDItoRS

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956 qualified Cost Auditors have been appointed to conduct Cost Audits relating to Insecticides (technical Grade and Formulations) and Fertilizers of the Company.

CoNSeRVAtIoN oF eNeRGY, teCHNoLoGY ABSoRPtIoN AND FoReIGN eXCHANGe eARNINGS AND outGo

As required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, the information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed.

PARtICuLARS oF eMPLoYeeS

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the statement giving the required information of the employees covered by this section of the Act is given in the Annexure forming part of this Report.

ACkNoWLeDGeMeNt

your Directors wish to thank the employees for their continued dedicated service. they would also like to acknowledge the co-operation and support received by the Company during the year from bankers, financial institutions, business partners and other stakeholders.

on behalf of the Board of Directors

R. GoPALAKRIShNANChairman

Mumbai, 15th April, 2009.

17

ANNeXuRe to tHe DIReCtoRS’ RePoRt(Under Section 217(1)(e) of the Companies Act, 1956)

Disclosures

A. CoNSeRVAtIoN oF eNeRGY (a) energy Conservation Measures taken: Energy conservation is the practice of decreasing the quantity of energy used. It is achieved through efficient energy

use, in which each unit of energy used is decreased while achieving similar outcome, or by reducing the consumption of energy services. Energy consumption increases cost, creates impact on the environment, reduces non renewable sources which are available at a cost and are fast depleting. In many cases, it contributes to global warming. As an organization, therefore, the Company constantly attempts to conserve energy, with a view to reduce these impacts.

the Company has imbibed conservation in its working culture. our focus is to conserve energy by eliminating waste and improving efficiencies. During the year under review, focus was towards eliminating wastages by every consumer of energy.

Boiler fuel was changed from furnace oil to bio mass. Utilization of heat from flue gas to treat high tDS effluents helped in reducing the use of fuel and hence reduced overall cost. Usage of gas based power plant instead of fuel helped in sustaining power cost.

the overall trend in prices of all sources of energy was higher compared to the previous year, leading to negative variance due to price. however, the conservation programme implemented by the Company helped to control the cost effectively as usage variance was favorable.

As recognition of these achievements, your Company has received the National Energy Conservation Award in the Chemical Sector, for the year 2008, from the Ministry of Power, New Delhi.

(b) Additional Investments and Proposals, if any, being implemented for reduction of energy Consumption: Projects identified through initiatives such as tPM (total Productive Maintenance), DIShA (the Company’s Enterprise

Value Creation Programme) and LASER (Learn, Apply, Share, enjoy & Reflect) were implemented, resulting in reduced energy consumption in few cases. Such projects involved harnessing new ideas for improvements and investments which gave adequate returns and secured the future energy needs of the Company. Capital investment proposals for modernization of the manufacturing plants for process improvement, capacity enhancement and automation for reducing variability in operation also gave favorable cost impacts of our products, making them competitive. the Captive Power Plant (Cogeneration model) at Ankleshwar Unit became operational during the year.

(c) Impact of the measures at (a) and (b) for reduction of energy Consumption and consequent impact on the Cost of Production:

Captive Power Plants and energy conservation measures driven across the manufacturing locations resulted in sustaining energy consumption i.e. there was a positive variance in usage. however, as the fuel input costs have substantially increased during the current financial year, the overall energy bill was higher.

(d) total energy consumption and energy consumption per unit of production as per Form A:

FoRM ‘A’

DISCLoSuRe oF PARtICuLARS WItH ReGARD to CoNSeRVAtIoN oF eNeRGY

(a) Power and Fuel Consumption

2008-2009 2007-2008

1. Electricity

(a) Purchased Unit total amount Rate/Unit

(b) own Generation through Diesel generator Unit Unit per litre of Diesel oil total amount Cost/Unit

In Lacs of kwhRs. LacsRs./kwh

In Lacs of kwhKwh/LitreRs. LacsRs./kwh

1,24.936,45.12

5.16

11.402.87

1,51.8013.31

1,79.707,39.79

4.11

9.53 3.06

1,01.5110.65

18

RALLIS



2008-2009 2007-2008

(c) own Generation through CPP Unit Unit per M3 of Gas total amount Cost/Unit

In Lacs of kwhKwh/M3

Rs. LacsRs./kwh

56.443.48

2,31.024.09

57.06 3.56

1,99.74 3.50

2. Furnace oil Quantity total Amount Rate/Unit

KlRs. LacsRs./Litre

1,904.934,72.32

24.79

3,571.12 6,69.55 18.75

3. others/Internal Consumption (Light Diesel oil) Quantity total Cost Rate/Unit

(high Speed Diesel) Quantity total Cost Rate/Unit

(Bio Mass) Quantity total Cost Rate/Unit

KlRs. LacsRs./Litre

KlRs. LacsRs./Litre

MtRs. LacsRs./Kg

–––

113.6135.0730.87

1,272.1952.08

4.09

3.18 0.91

28.49

206.99 63.61

30.73

1,223.7544.05

3.60

4. Gas Quantity total Cost Rate/M3

M3

Rs. Lacs Rs.

17,70,7252,04.43

11.55

16,74,868 1,71.45

10.24

(b) Consumption per unit of production

Focused drives at all Units contributed to sustain the energy consumption per unit of production, compared to that of the previous year. however, increase in cost/kg of manufacture was observed because of steep increase in fuel costs.

B. teCHNoLoGY ABSoRPtIoN

FoRM ‘B’

Research and Development (R & D)

1. Specific areas in which R & D is carried out by the Company:

Chemical synthesis/process development of new products in the areas of crop protection chemicals was carried out. through ‘Design of Experiments’ (DoE), process improvement and cycle time reduction were undertaken in the manufacture of existing products. Environment, health and Safety (EhS) issues were given special emphasis in the process development work.

New formulation development work was undertaken with specific objective of preparing products with enhanced bioefficacy and increased safety to end-user. Development of eco-friendly products was given special attention. Several eco-friendly formulations are under various stages of development. Efforts continued on developing cost-effective packaging with minimal environmental impact.

19

2. Benefits derived as a result of above R & D:

(i) Seven new product registrations were obtained and three products were launched in the market.

(ii) Process development work has resulted in cost reduction in existing products as well as in waste reduction.

(iii) one eco-friendly formulation was introduced during the year.

(iv) New type of packing was introduced during the year, resulting in savings.

3. Future Plan of Action:

the Company’s initiative of New Product Development (NPD) process had identified several new products to be developed during the next 5 to 8 years. Several products are at various stages of development. Improvement plans for existing products are also underway with an objective of cost reduction and being competitive in the market. From the NPDI process, 6 products (mainly combinations) have been identified and approved by the NPDI Decision Board for the initiation on data generation.

4. expenditure on R & D:

Rs. Crores

2008-09 2007-08

Capital expenditure 0.18 0.42

Revenue expenditure* 2.32 4.92

2.50 5.34

total R&D expenditure as a percentage of total turnover 0.30% 0.80%

* includes amount of Rs. 0.51 Crore (Previous Year Rs. 0.73 Crore) paid to an external agency.

During the year, the Company has also incurred an expenditure of Rs. 7.62 Crores (Previous Year Rs. 1.48 Crores) towards product development and registration, which is included under Capital Work In Progress (CWIP). total amount included in CWIP is Rs. 9.10 Crores (Previous Year Rs. 1.48 Crores).

5. technology Absorption, Adaptation and Innovation:

(a) the introduction of New Product Development (NPD) process resulted in obtaining registration for seven new products, of which three products were commercialized.

(b) Process improvements in existing products resulted in better productivity, efficiency and quality.

(c) Product improvements have and will continue to result in improved productivity and cost reduction and this will result in improving the profitability of the Company.

(d) the New Millennium Indian technology Leadership Initiative (NMItLI) is being actively pursued to improve the performance of the molecules and achieve commercial success.

(e) Development of green chemistry products has been initiated through NRDC (Azadirachtin) and Bio products.

(f ) there is no import of technology during the last 5 years.

(g) the Innovation turnover Index (revenue from products newly introduced in last four years to total turnover) at around 30% for the year, continued to exceed our target and was in line with the previous year.

C. FoReIGN eXCHANGe eARNINGS AND outGo

total Foreign Exchange used and earned

Rs. Crores

2008-09 2007-08

1. Foreign Exchange Earned 294.74 163.92

2. outgo of Foreign Exchange 265.51 163.66

3. Remittances of Dividends (Net) 0.15 0.25

20

RALLIS



MANAGeMeNt DISCuSSIoN AND ANALYSIS

INDuStRY StRuCtuRe AND DeVeLoPMeNtS

the crop protection industry in general had a good year in 2008. the overall global market grew by about 25% to cross USD 41 billion, which also reflected a robust underlying volume growth of over 10%. In India too, it is estimated that the market experienced double digit growth. Indian crop protection market is estimated to have registered an average price increase in the range of 10 to 12%, coupled with a marginal decline in volumes. this trend, however, was not uniform during the year. While the first half of the year depicted positive trends, the environment in the second half led to new challenges.

During the year under review, the Kharif season was good in the Southern states due to good distribution of the South West monsoon; but it was erratic in the North and the West. Long dry spells caused poor yield across central and western belts of the country, especially for crops like cotton, soybean and pulses. Rabi season was characterized by low pest and disease occurrence in key crops, especially paddy. overall, Fungicide and herbicide segments remained growth areas for the industry.

Area under key crops remained lower than last year in the Kharif season while it was marginally higher during the Rabi season. Since the last few years, the acreage under Bt Cotton has been steadily increasing. this year, area under Bt II with stacked genes for multiple caterpillar resistance also registered a growth.

overall insect incidence in the rice crop was on the lower side compared to the previous year. While attack of Brown Plant hoppers was very weak in the traditional areas for this pest, it did appear severely in some unconventional pockets of Uttar Pradesh, haryana and Chhattisgarh. Blast, a fungal disease in rice crop emerged heavily in some areas of West Bengal and Andhra Pradesh. this led to growth in the sales of blasticides in these segments.

on cotton, the infestation of Mealy Bugs in North and West has been poor, leading to decreased usage of organophosphate and Neonicotinoid insecticides.

Industry faced availability problems with steep cost increases of raw materials, especially for organophosphates during the first half of the year. the escalation in the cost of raw materials also forced the industry to increase the prices of many products during the year. the crop produce prices also remained mostly remunerative and this enabled the farmers to use the crop protection chemicals judiciously despite higher prices, to create value.

the economic events which the world witnessed in the latter half of last year has been described by many experts as the most adverse since the Great Depression. the economic downturn is affecting all developed economies too, with many of them expected to shrink in 2009. Many industry sectors are facing steep challenges primarily driven by drop in fundamental demand. the activity in agriculture is likely to uphold since it caters to the basic growing needs of food, feed, fibre and now fuel. Agriculture however will also not remain unaffected from the effects of global recession, as value erosion and fund availability constraints begin to impact the sector. the overall performance of agriculture in India during 2008-09 has been good and it is expected that the outlook continues to be positive with the support provided to the Indian farming community and on the back of another normal monsoon. the fundamentals for agriculture remain strong and it is expected that activity levels and sentiments will perk up as the year advances.

Rallis’ overall performance

the total consolidated revenues at Rs. 910.68 Crores registered a growth of 23%, with all business segments in crop protection chemicals turning in a good performance. the Company’s profit from operations during the year on a consolidated basis, at Rs. 119.53 Crores, is the highest operational profit ever for the Company. this is a growth of 83% as compared to the previous year’s operational profit of Rs. 65.43 Crores. the net profit was Rs. 72.02 Crores, as against a net profit of Rs. 125.31 Crores in the previous year on consolidated basis. however, the previous year’s net profit included a significant amount arising from profit on sale of land.

During the year, your Company focused on improving the working capital efficiency as a key focus activity of DIShA. As a result, the net cash generated from operating activities was Rs. 138.06 Crores during the year, another highest in the history of the organization.

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ReVIeW oF oPeRAtIoNS

Agro Inputs

(1) Crop Protection Chemicals:

(a) Domestic formulations business:

the domestic formulation business registered a growth of 10% over the previous year driven by robust performance of the key brands. As part of the product portfolio enrichment exercise, as also to drive sustainability, the Company prioritized its resources and efforts to focus on products of strategic importance, along with improving the profitability of other generic products. the new product launched during the previous year, tAKUMI has performed well and farmers have expressed great confidence in the product. our flagship brand in the paddy BPh segment, Applaud also registered healthy growth.

Building strong customer relationships is one of the key areas that your Company believes as core to its strategy. the Rallis Kisan Kutumba (RKK) initiative was further strengthened during the year by adding another lakh of farmers as RKK members. Focus Group Discussions, 4S (relationship) campaigns and farmer helplines have been widely used during the year to understand the customer requirements and advise them on crop solutions.

With an objective of strengthening the relationships with trade partners, Bhagidari Sabhas (channel partner interactive forum) have been extended to the South. your Company has also won Qimpro Best Practices Innovation award for Bhagidari Sabhas during the year.

(b) Institutional Business:

the Domestic Institutional Business consisting of technicals, Bulk Formulations, Seed treatment Chemicals and household Products, maintained its sales compared to the previous year. the business continued with its sales to major customers and products during the year, inspite of availability constraints in some products and some difficult market conditions.

the Company focused on strengthening its relationship with key institutional customers and retaining its presence in the major products. Suitable co-marketing arrangements put in place helped your Company to sustain market presence in key areas.

(c) International Business:

the International Business achieved record sales of Rs. 288 Crores in 2008-09, a growth of about 79% over last year’s sales. As a result, its share in the overall portfolio has improved to 32% of total revenues. this was achieved through the APoLLo programme aimed at increasing the international business through new supply agreements, contract manufacturing as well as registration based sales. the business experienced higher costs but also could realize higher prices for most parts of the year. While there were crop shifts in major agriculture areas such as the US and Brazil, the underlying cropping activity increased and led to higher demands for crop protection chemicals.

During the year, the International Business growth programme, APoLLo gained momentum as the Company applied for over 100 registrations across new and existing territories. Revenues increased across geographies, particularly in Latin America, USA, Japan, South East Asia, Australia and Africa. Growth was registered in all the key products. It has also entered into new Agreements for contract manufacturing with key customers which have a revenue potential of Rs. 1,000 crores over a 5 year period.

(2) Seeds:

the Company has continued its seeds business through distribution of Bt Cotton, Wheat and Paddy hybrid seeds. Conversion from Bt I to Bt II resulted in drop in volumes of Cotton business over the previous year.

(3) Plant Growth Nutrients:

the Company is consolidating its Plant Growth Nutrient (PGN) business with focus on key products. As a result, performance of the PGN business improved during the year with improvement in profitability.

Leather Chemicals:

Leather chemicals business performed on the expected lines for the first half of the year, while the second half witnessed a downward trend. the Company’s market share of Vegtan was maintained at around 45% of the total imported Vegtan business in India. 63% of the Company’s sales were direct sales to tanners and the balance was to traders.

22

RALLIS



totAL SHAReHoLDeR RetuRN

the total Shareholder Return (tSR) represents the yearly rate of return of an investment made considering the capital appreciation plus dividends over time. the tSR of an investment made in your Company in March 2003 kept till the last trading day of March 2009 works out to be extremely attractive at 54% per annum. this means that if one had invested Rs. 100 in Rallis stock in March 2003, the total value that the investment would have earned would be Rs. 1334, if one had sold the stock on the last trading day of March 2009.

these are reflected in the price of the Rallis shares. the Rallis stock price has significantly out-performed the very heady and well-publicized Sensex during the years after 2001. If both the Rallis stock price and Sensex were indexed to 100 as on the last trading day of March 2001, the y-o-y performance of the Rallis stock and Sensex till Fy 2009 is shown in the chart.

oPPoRtuNItIeS AND outLook

the fundamentals of the Agriculture sector continue to be robust and will drive growth in the years to come. With the availability of land under agriculture being limited and coming down in many areas, the need to drive productivity by judicious use of appropriate agri inputs is imperative. Increased area under Bt Cotton hybrids continue to open up the opportunities for higher consumption of products for sucking pest, fungicide, herbicide and plant growth nutrient segments. this is also likely to further the Bt Cotton seeds business. New products launched in the previous years, such as Applaud, takumi and Sedna have been instrumental in driving the performance during the current year. the Company will continue to introduce new products during the year 2009-10, which will further help in strengthening the relationships with our farmers.

the enterprise value creation programme DIShA (Drive Innovative Solutions with Hyper Achievements) which aims at reengineering various processes and activities across the Company to generate value, and the International Business growth programme APoLLo are also expected to contribute well to the overall growth agenda of the organization.

the Company conducted Bhoomipujan and foundation stone laying ceremony at Dahej on 28th January, 2009. this signifies the formal commencement of construction of its new facility at this location. the Dahej plant will be a multi-purpose technical manufacturing facility for a number of crop protection products.

Fy 2001 Fy 2002 Fy 2003 Fy 2004 Fy 2005 Fy 2006 Fy 2007 Fy 2008 Fy 2009

SENSEX 3604 3469 3049 5591 6493 11280 13072 15644 9709

RALLIS ShARE PRICE 39 65 56 71 233 330 248 335 392

23

RISkS, CoNCeRNS AND tHReAtS

Apart from the quantum, timing and even distribution of rainfall are critical for the domestic business. the situation last year had not been so different from the previous year. Rising costs and uncertainty in availability of some key raw materials continue to be a challenge. Farmers’ willingness and ability to spend will be an important driver to demand generation. Strong support produce prices and better availability of credit will ease the pressure on the farming community.

Exchange rate fluctuations between Dollar and Rupee could also impact revenues as well as costs in the foreseeable future.

INItIAtIVeS tAkeN DuRING 2008-09

the Enterprise Value Creation initiative ‘DIShA’ launched during the previous year, was further strengthened by launching wave 3 aimed at optimizing the fixed costs and operating expenses of the Company. DIShA wave 1 covering manufacturing and supply chain and wave 2 addressing sales and marketing continue to contribute well to the overall performance of the Company. to complement the DIShA programme and also improve the engagement of the workforce, LASER (Learn, Apply, Share, enjoy & Reflect) workshops were held in the factories. these workshops get cross functional groups working together to generate new ideas to address issues which improve the operating efficiency at those Units.

ReSeARCH & DeVeLoPMeNt (R&D)

During the year 2008-09, the Company’s Research and Development efforts, through its New Product Development (NPD) process, helped the Company to launch a new product Mantis (tricyclazole). two more products, Ergon (Kresoxim-methyl) and Balwan (Indoxacarb + Acetamiprid) are ready for launch. Dossiers for registration of two more products have been submitted to the Central Insecticides Board.

New products launched during the previous year viz. takumi and Sedna were established well during the year 2008-09, and were well appreciated by farmers in targeted crops. Process improvements to enhance purity and yield has also resulted in cost reduction of key products.

Field evaluation of Lead molecules identified under New Millennium Indian technology Leadership Initiative (NMItLI) project is in progress.

eNVIRoNMeNt, HeALtH & SAFetY (eHS)

During the year, the Company continued to maintain the status of zero reportable accidents across the Company, coupled with fifty percent reduction in the number of first aid injuries, keeping up with the continual improvement path year on year. there has not been any case related to occupational health illness from the operational work place. Besides improvement of the systems and procedures, capturing of near misses to identify and eliminate unsafe acts and unsafe conditions was promoted through ‘LASER’, which contributed to injury reduction.

As a part of continual improvement, waste water management system was up-graded at the Akola Unit and additional system installed at the Lote Unit to meet the challenge of change in pollution load on account of capacity enhancement.

honouring Kyoto Protocol, a beginning has been made during the year in addressing the global issue of ‘Climate Change’ through Green Chemistry approach, aiming to reduce generation of green house gases from our operations. Commissioning of a second gas based captive co-gen power plant at Ankleshwar Unit brings in contribution by way of carbon reduction.

the occupational health & Safety (oh&S) Management System and Environment Management System of all manufacturing Units underwent recertification with up- gradation to newer version under ohSAS 18001: 2007 specification and ISo 14001: 2004 standard respectively. Adherence to the elements of British Safety Council 5 star audit ensured sustainability of good safety and health practices at the operational area.

Safety systems and procedures at warehouses spread across the country continued to improve with additional safety appliances in place and by inculcating a safety culture in the workforce by continuous training for safe handling, stocking and transportation of our products.

We continued to bag external appreciation for our excellence in Environment, health & Safety performance across the manufacturing locations by way of awards during the year, including:

National Safety Award from Ministry of Labour & Employment, Govt. of India

– Winner in category VII and VIII for Lote Unit for the fourth consecutive year

– Winner in category V and Runner up in Category VI for Akola Unit

24

RALLIS



National Safety Council of India – ‘Prashamsa Puraskar’ for Lote and Akola Units

National Safety Council (Maharashtra Chapter) – Merit certificate for Akola and Lote Units

Gujarat Safety Council – Special Appreciation Certificate for Ankleshwar Unit.

INteRNAL CoNtRoLS SYSteMS AND ADeQuACY

Resources of the Internal Audit Department were augmented through addition of experienced audit personnel. While continuing to reap the benefits of working through a single large outsourced Internal Audit firm for the fifth consecutive year, the Department also conducted a major initiative of doing in-house internal audits.

the extent of improvement in internal controls was quantified through a rating mechanism called the Rallis Internal Control Review (RICR) rating. Audit recommendations were followed up with the Function owners to help ensure their implementation and sustenance. the end result was a positive assurance on sustenance as well as improvement in the level of the internal controls across locations and functions.

Cost savings and profit improvement ideas also formed an important part of the responsibilities of the Internal Audit Department.

All internal audits were conducted in a SAP environment. Regular reviews were conducted by the Management Executive Committee and the Audit Committee and directions were given for appropriate actions.

the Enterprise Risk Management framework and CEo/CFo certification as required under Clause 49 of the Listing Agreement with Stock Exchanges for controls testing pertaining to financial reporting, resulted in continuing improvement in internal controls.

HuMAN ReSouRCeS

the Company in its journey to enhance the Employee Satisfaction, Retention and Skills undertook several initiatives during this year. For sustaining objectivity in measuring employee contribution towards Company growth, Strategy Deployment Matrix as a tool was successfully deployed across the organization. Employee Engagement Survey undertaken with the help of Gallup organization indicated that employees perceive Rallis as one of the top 20% organizations to work for in Gallup’s global database. the Company also carried out an Internal Customer Satisfaction Survey to look for opportunities to enhance the employee satisfaction index.

During the year, the Company has organized training programs for all categories of employees in different areas such as technical, behavioural, tata Business Excellence Model and tata Code of Conduct. With this, the Company has achieved its annual target for 6 man days training per employee this year.

the Company had, during the year, announced a Voluntary Retirement Scheme (VRS) for all employees at its Patancheru Unit, near hyderabad in the State of Andhra Pradesh. the VRS was accepted by all workers at the Unit and the manufacturing operations at the Unit have since been discontinued.

As on 31st March, 2009, the employee strength was 891, down from 1016 as on 31st March, 2008.

BuSINeSS eXCeLLeNCe

As a milestone in the Business Excellence journey, Rallis participated for the first time in the CII-EXIM Business Excellence assessment which is based on the EFQ (European Foundation for Quality Management) model and received the commendation certificate for Significant Achievement at the annual CII Quality summit 2008.

During the year, Rallis was also conferred the Growth Strategy Excellence Award in the Indian Crop Protection Chemicals Market by Frost & Sullivan, a consulting organization. Frost & Sullivan recognizes outstanding industry achievements by presenting the Frost & Sullivan Awards to top corporates globally. your Company is the first recipient of this award in the Indian Crop Protection industry. Rallis was conferred the Growth Strategy Excellence award based on a detailed analysis of the Indian Crop Protection Chemicals market. the Award is given to the company that has bolstered its position in the market during the base year and whose strategy will have a lasting impact on the market.

Rallis is focused on process orientation, customer orientation and cost effectiveness by devising its BE intervention plan including Enterprise Process Model (EPM) frame work, Cost of Quality (CoQ) and Quality Function Deployment (QFD) for external customers as well as for its employees.

As a Business Excellence promotion activity, 114 participants from various functional areas took part in Practicing Business Excellence (PBE) Program conducted by tata Quality Management Services (tQMS) faculty at hyderabad, Chandigarh and Mumbai.

25

All manufacturing Units strengthened their tPM activities and the improvements at the shop floor level were appreciated during CII external assessment. LASER workshops were extended to turbhe Unit from Ankleshwar and Lote Units, in which 100% factory people participated and selected projects for improvement in their work area.

INFoRMAtIoN teCHNoLoGY

In line with the overall growth objective and strengthening our infrastructure base, the Company continues to invest significantly in Information technology (It) and leverage it for business value.

Significant progress has been made in utilization of MySAP Enterprise Resource Planning system and the Business Warehouse package BIW (Business Intelligence Warehouse) from SAP. this has also helped in re-engineering and simplification of business processes, particularly in the areas of logistics management comprising sales distribution and materials management, along with production planning and financial control; to improve agility and customer service. Deployment of BIW will provide analytical reports and key business MIS at the right time through the system.

the Company continues to outsource its SAP maintenance and service to tCS, and invest in It infrastructure to support its business applications. A robust virtual private network using MPLS technology is in place. the Company has leveraged the growing telecom network in the country to provide high bandwidth terrestrial links to all its operating units. this has enabled effective coordination of activities across geographically dispersed locations. the Company has also implemented video conferencing facilities at 3 of its major offices to cut on travelling costs and improve on the quality of communication.

Information Security and reliable disaster recovery management continue to be a critical focus area – especially as most business processes become fully It-enabled.

the Company views It as a strategic tool to enhance business value and enable new ways of doing business.

CoRPoRAte SuStAINABILItY

Rallis concluded another year of undivided commitment to improve the Quality of Life of members of the Community, especially the underprivileged.

this year the main focus was on education of underprivileged women and children, addressing the employability challenge. this was done over and above wide range of other initiatives as per the needs of local community including donations for village development, afforestation, safety and environment awareness, support to old age homes and orphanages, AIDS awareness and support to cancer patients.

this was achieved through active employee volunteering. this year we crossed 1000 hours mark in volunteering, over and above hours volunteered by sales and marketing teams spread across the remote rural areas of the country.

Rallis fully supports the need for growth and development of Scheduled Castes and Scheduled tribes (SC/St) in a spirit of Affirmative Action through its adoption of the Code of Conduct for Affirmative Action.

During the year, your Company initiated an employability programme RUBy (Rallis Ujjwal Bhavishya yojana) to impart BPo related training to underprivileged boys and girls. this is being done by partnering with tata Business Service Solutions (tBSS), a tAtA BPo venture who is providing the professional training based on NASSCoM curriculum. this programme which also supports Affirmative Action is administered and funded by Rallis and managed by tBSS. Qualified participants of this programme will be awarded a certificate which makes them eligible to obtain employment in the fast growing IteS industry.

Rallis adheres to applicable global standards and policies and also honours global initiatives. the Company prepares its Sustainability Report as a means for stakeholder engagement, based on the guidelines of the Global Reporting Initiative (GRI) which comprehensively covers its performance on the triple bottom line of economic, environment and social performance. the Sustainability Report for 2007-08 was based on the revised G3 guidelines. Being a signatory to Global Compact Principles, the Company files a Communication on Progress (CoP) to the Global Compact Society every year on the Company’s efforts in protecting human rights and promoting the conservation of environment.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations may be “forward- looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include climatic conditions, economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.

26

RALLIS



REPORT ON CORPORATE GOVERNANCE

1. Company’s Philosophy on the Code of Governance.

The Company’s philosophy of Corporate Governance involves striving to achieve the highest principles of transparency, accountability and integrity in functioning. The Company seeks to focus on enhancement of long term value for all stakeholders and fulfil the social obligation entrusted upon the Corporate sector.

As a part of the Tata Group, the Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted the Tata Code of Conduct for its employees, including the Executive/Managing Director. The Company has also adopted a Code of Conduct for its Non-Executive Directors. The Company’s corporate governance philosophy is also strengthened through adoption of the Tata Code of Conduct for Prevention of Insider Trading and the Tata Business Excellence Model. The Company has also adopted a Whistle Blower Policy to provide a mechanism to enable the employees to approach the Audit Committee of the Board of Directors while reporting the instances of unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy, which may come to their knowledge.

Your Company has complied with the guidelines on corporate governance stipulated in Clause 49 of the Listing Agreements executed with the Stock Exchanges, the disclosure requirements of which are given below:

2. Board of Directors. The Board of Directors, alongwith its Committees, provides leadership and guidance to the management and directs and

supervises the performance of the Company, thereby enhancing stakeholder value. The Board has a fiduciary relationship in ensuring that the rights of all stakeholders are protected.

The Company has a non-executive Chairman and the 5 Independent Directors comprise one-half of the total number of Directors. The Board of Directors at present comprises 10 Directors, of which 9 are Non-Executive Directors.

None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees (Committees being Audit Committee and Shareholders’/ Investors’ Grievance Committee), across all the companies in which he is a Director. The necessary disclosures regarding committee positions have been made by all the Directors. None of the Directors hold office in more than 15 companies.

Composition and category of Directors The names and categories of Directors, their attendance at the Board Meetings held during the year and at the last

Annual General Meeting, as also the number of Directorships and Committee positions held by them in other companies are given below:

Director Category No. of Board Meetings

attended during 2008-09

Attendance at AGM held on

30th May, 2008

All Directorships*(As on 31.03.2009)

All Mandatory Committees(As on 31.03.2009)

Chairman Member Total Chairman Member Total

Mr. R. Gopalakrishnan (Chairman)

Non-IndependentNon-Executive

8 Yes 2 7 9 – 4 4

Mr. Homi R. Khusrokhan Non-IndependentNon-Executive

8 Yes – 1 1 – 1 1

Mr. B. D. Banerjee IndependentNon-Executive

7 Yes – 1 1 – 1 1

Mr. E. A. Kshirsagar IndependentNon-Executive

8 Yes – 6 6 3 5 8

Dr. S. Ramanathan IndependentNon-Executive

4 Yes – 1 1 – – –

Mr. Prakash R. Rastogi IndependentNon-Executive

7 Yes – 2 2 – 1 1

Mr. Bharat Vasani Non-IndependentNon-Executive

8 Yes – 9 9 – 1 1

Dr. Venkatrao S. Sohoni Non-IndependentNon-Executive

5 Yes 1 2 3 – 3 3

Dr. K. P. Prabhakaran Nair(w.e.f. 01.09.2008)

IndependentNon-Executive

3 No – 1 1 _ 2 2

Mr. V. Shankar(Executive Director upto 14.01.2009; Managing Director w.e.f. 15.01.2009)

Non-IndependentExecutive

8 Yes – 1 1 – 1 1

* Excludes all Private, Foreign Companies and Alternate Directorships

27

The Company held 8 Board Meetings during 2008-09 and the gap between two Meetings did not exceed four months. The dates on which the Board Meetings were held were as follows: 15th April, 2008; 30th May, 2008; 15th July, 2008; 10th October, 2008; 16th October, 2008; 28th November, 2008; 15th January, 2009 and 24th March, 2009.

The information as required under Annexure IA to Clause 49 is made available to the Board. The Board reviews the declaration made by the Managing Director regarding compliance with all applicable laws on a quarterly basis.

The Company did not have any pecuniary relationship or transactions with Non-Executive Directors during the year.

3. Code of Conduct.

The Company has adopted the Tata Code of Conduct for the senior management of the Company, including the Managing Director of the Company. The Board has also laid down a Code of Conduct for the Non-Executive Directors of the Company. Both the Codes are posted on the website of the Company.

All Board members and senior management personnel have affirmed compliance with the applicable Code of Conduct.

4. Audit Committee.

Terms of reference

The Audit Committee functions according to its Charter that defines its powers, scope and role in accordance with Clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956. The terms of reference of the Audit Committee are as follows:

To overview the Company’s financial reporting process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

To review with the management the quarterly and annual financial statements before submission to the Board for approval.

To recommend to the Board the appointment, re-appointment and, if required, the replacement or removal of statutory auditors, fixation of audit fees and to approve payment for any other services rendered by the statutory auditors.

To review with the management, performance of the statutory and internal auditors.

To review the adequacy of the internal audit function and the adequacy and efficacy of the internal control systems.

To review the findings of any internal investigations by the internal auditors.

To look into the reasons for substantial defaults in payments to depositors, debenture holders, shareholders and creditors.

To review the statement of significant related party transactions submitted by the management.

To review the functioning of the Whistle Blower mechanism.

And, generally, all items listed in Clause 49 II D of the Listing Agreement.

Composition, name of members and Chairman and Attendance during the year

The Audit Committee of the Company is constituted in accordance with the provisions of Clause 49 of the Listing Agreement read with Section 292A of the Companies Act, 1956.

28

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The composition of the Audit Committee and the details of Meetings attended by the Directors are given below:

Name of the Member Category No. of Meetings attended during 2008-09

Mr. E. A. Kshirsagar, Chairman (Chartered Accountant)

Independent Non-Executive

7

Mr. Homi R. Khusrokhan, Member (Chartered Accountant)

Non-Independent Non-Executive

7

Mr. B. D. Banerjee, Member Independent Non-Executive

6

Mr. Prakash R. Rastogi, Member Independent Non-Executive

7

Dr. V. S. Sohoni, Member (w.e.f. 01.01.2009)

Non-Independent Non-Executive

1

Dr. K. P. Prabhakaran Nair, Member (w.e.f. 01.01.2009)

Independent Non-Executive

3

The Audit Committee met 7 times during the year and the gap between two Meetings did not exceed four months. The dates on which the Audit Committee Meetings were held were as follows: 15th April, 2008; 15th July, 2008; 16th October, 2008; 28th November, 2008; 15th January, 2009; 26th February, 2009 and 24th March, 2009.

Necessary quorum was present at the above Meetings.

The Meetings of the Audit Committee are held at the Registered Office of the Company. They are usually attended by the Managing Director, the EVP – Finance & Legal, the Chief Internal Auditor, the GM – Legal & Company Secretary and a representative of the Statutory Auditors. The Business and Operation Heads are invited to the Meetings, when required. The GM – Legal & Company Secretary acts as the secretary of the Committee.

The Chairman of the Audit Committee, Mr. E. A. Kshirsagar was present at the Annual General Meeting of the Company held on 30th May, 2008.

5. Remuneration Committee.

Terms of reference

The Committee is responsible for considering and approving the remuneration and commission of the Managing/Executive Directors and recommending the commission payable, if any, to the Non-Executive Directors. In addition, the Committee has been given the mandate to consider and approve appointment of and the remuneration payable to Executives at the Vice President level and above and also matters relating to Voluntary Retirement Schemes and Early Separation Schemes of the Company. The Committee also reviews HR policy matters and issues such as senior management succession planning, incentive schemes for senior management, etc.

From 1st January, 2009, the Committee has been renamed as the Nominations & Remuneration Committee and has been given the additional mandate of making recommendations regarding the composition of the Board, identifying Independent Directors to be inducted to the Board from time to time and taking steps to refresh the composition of the Board from time to time.

Composition, name of members and Chairman and Attendance during the year

The Composition of the Committee and the details of Meetings attended by the Directors are given below:


Mr. B. D. Banerjee, Chairman Independent Non-Executive

2

Mr. R. Gopalakrishnan, Member Non-IndependentNon-Executive

3

Mr. E. A. Kshirsagar, Member IndependentNon-Executive

3

Mr. Prakash R. Rastogi, Member (w.e.f. 01.01.2009)


–

The Committee met 3 times during the year, on 15th April, 2008; 30th May, 2008 and 8th December, 2008.

29

The Chairman of the Remuneration Committee, Mr. B. D. Banerjee was present at the Annual General Meeting of the Company held on 30th May, 2008.

Remuneration Policy

The remuneration of senior management is decided taking into consideration the employment scenario, remuneration package of the industry and remuneration package of managerial talent in other industries. The annual variable pay of senior managers is linked to the performance of the Company in general and their individual performance for the relevant year, measured against specific Key Result Areas, which are aligned to the Company’s objectives.

The Non-Executive Directors are paid remuneration by way of commission and sitting fees. In terms of the shareholders’ approval obtained at the Annual General Meeting held on 30th May, 2008, commission is paid at a rate not exceeding 1% per annum of the profits of the Company, computed in accordance with the provisions of the Companies Act, 1956. The distribution of commission among the Non-Executive Directors is recommended by the Nominations & Remuneration Committee and approved by the Board. The commission is distributed on the basis of their attendance and contribution at the Board and Committee Meetings as well as guidance provided to senior management other than at meetings.

The Company paid sitting fees of Rs. 20,000/- per meeting to the Non- Executive Directors for attending meetings of the Board, Executive Committee of the Board, the Audit Committee and the Remuneration Committee, Rs.10,000/- per meeting for attending the meetings of the Board Committee on Corporate Development and the Property Committee and Rs.5,000/- per meeting for attending meetings of the other Committees of the Board.

The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to the Managing/Executive Directors. Salary is paid within the range approved by the shareholders. Annual increments, effective 1st April each year, are approved by the Board, as per the recommendations of the Nominations & Remuneration Committee. Perquisites and allowances are subject to such overall ceiling as may be fixed by the Board from time to time. Within the prescribed ceiling, the perquisites are approved by the Nominations & Remuneration Committee. Commission is calculated with reference to the net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year, based on the recommendations of the Nominations & Remuneration Committee, subject to the overall ceilings stipulated in the Companies Act, 1956. Specific amount payable as commission is based on the performance criteria laid down by the Board, which broadly takes into account the profits earned by the Company for the year.

Details of remuneration for 2008-09

The aggregate value of salary and perquisites paid to Mr. V. Shankar, Managing Director, during the year 2008-09 is Rs. 95,97,307/-, comprising:

Salary : Rs. 27,60,000/-

Perquisites and allowances : Rs. 33,37,307/-

Commission for the financial year 2007-08, paid during 2008-09 : Rs. 35,00,000/-

Period of Agreement : upto 12th March, 2012

Notice period : The Agreement may be terminated by either party giving the other party six months’ notice or the Company paying six months’ remuneration in lieu thereof.

Severance fees : Nil

The Board of Directors at their Meeting held on 15th January, 2009, subject to the approval of the Members, appointed Mr. V. Shankar, a Whole-time Director, with designation CEO & Executive Director as the Managing Director of the Company, with immediate effect.

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The Sitting fees paid during the financial year 2008-09 to the Non- Executive Directors for attending the Board and Committee Meetings for the year 2008-09 and the commission paid to them during 2008-09 for the year 2007-08, are as follows:

Name of Director Fees paid (Rs.) Commission for the financial year 2007-08, paid

during 2008-09 (Rs.)

Mr. R. Gopalakrishnan 3,45,000/- 6,00,000/-

Mr. Homi R. Khusrokhan 3,80,000/- 3,55,000/-

Mr. B. D. Banerjee 3,85,000/- 5,10,000/-

Mr. E. A. Kshirsagar 5,15,000/- 6,30,000/-

Dr. S. Ramanathan 1,80,000/- 4,25,000/-

Mr. Prakash R. Rastogi 3,95,000/- 4,90,000/-

Mr. Bharat Vasani 2,40,000/- 3,75,000/-

Dr. V. S. Sohoni 1,20,000/- –

Dr. K. P. Prabhakaran Nair 1,20,000/- –

Mr. Prasad R. Menon (Director upto 25.05.2007)

– 1,15,000/-

None of the Non-Executive Directors hold any shares in the Company.

6. Shareholders’/ Investors’ Grievance Committee.

The Shareholders’/ Investors’ Grievance Committee met twice during the year, on 15th April, 2008 and 28th November, 2008.

The composition of the Shareholders’/ Investors’ Grievance Committee and the details of the Meetings attended by the Directors are given below:


Mr. E. A. Kshirsagar, Chairman IndependentNon-Executive

2

Dr. V. S. Sohoni, Member (w.e.f. 01.01.2009)

Non-IndependentNon-Executive

–

Dr. K. P. Prabhakaran Nair, Member (w.e.f. 01.01.2009)


–

Mr. V. Shankar, Member Non-IndependentExecutive

2

Name, designation and address of Compliance Officer:

P. S. Meherhomji GM – Legal & Company Secretary 15 MIDC Industrial Estate Thane Belapur Road Turbhe Navi Mumbai 400 703 Phone : 022-6793 1530 Fax : 022-6793 1515 Email : [email protected]

Shareholders may also correspond with the Company on the email address: [email protected]

The number of investor complaints/requests/queries received and addressed during 2008-09 was 478. No queries remained pending as on 31st March, 2009.

31

No requests for transfer were pending as on 31st March, 2009. One request for dematerialization of 196 shares was pending as on 31st March, 2009. This request was received during the last week of March 2009 and hence was pending on 31st March, 2009, but has been subsequently processed, as certified by TSR Darashaw Limited (Registrars).

Shareholder Satisfaction Survey

A Shareholder Satisfaction Survey was conducted during the year under review by sending a questionnaire to all shareholders to determine their satisfaction level and to explore avenues for improvement. Responses received from the shareholders indicated an overall level of satisfaction.

7. Other Committees

(i) Executive Committee of the Board.

The Executive Committee of the Board is responsible for reviewing, before presentation to the full Board, items such as Business and strategy review, long-term financial projections and cash flows, capital and revenue budgets, acquisitions, divestments and business restructuring proposals, etc.

In addition, the Committee is also responsible for advising the management on development of business plans and future strategies for the Company.

The composition of the Executive Committee of the Board and the details of the Meetings attended by the Directors are given below:


Mr. R. Gopalakrishnan, Chairman Non-IndependentNon-Executive

5

Mr. Homi R. Khusrokhan, Member Non-IndependentNon-Executive

4


4

Dr. S. Ramanathan, Member IndependentNon-Executive

4

Mr. P. R. Rastogi, Member(w.e.f. 01.01.2009)


1


5

The Executive Committee of the Board met 5 times during the year, on 2nd June, 2008; 31st July, 2008; 12th August, 2008; 12th December, 2008 and 26th February, 2009.

The EVP – Finance & Legal is the permanent invitee to the Committee.

(ii) Nominations Committee.

One meeting of the Committee was held during the year, on 8th December, 2008.

The composition of the Nominations Committee and the details of Meetings attended by the Directors are given below:


Mr. B. D. Banerjee, Chairman IndependentNon-Executive

1


1

Mr. Prakash R. Rastogi, Member IndependentNon-Executive

1

32

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From 1st January, 2009, the Remuneration Committee has been renamed as the Nominations and Remuneration Committee, with the additional mandate of making recommendations regarding the composition of the Board, identifying Independent Directors to be inducted to the Board from time to time and taking steps to refresh the composition of the Board from time to time. Accordingly, the Nominations Committee has ceased to exist from this date

(iii) Ethics & Compliance Committee.

The Company has adopted the Code of Conduct for Prevention of Insider Trading, under the SEBI (Prohibition of Insider Trading) Regulations. Mr. D. K. Sundar, EVP – Finance & Legal has been appointed as the Compliance Officer for the implementation of and overseeing compliance with the Regulations and the Code across the Company.

The Company has also adopted the Code of Corporate Disclosure Practices for ensuring timely and adequate disclosure of Price Sensitive Information, as required under the Regulations. The Managing Director is the Public Spokesperson for this purpose.

The Company had constituted an Ethics & Compliance Committee of the Board to set forth the policies relating to and to oversee the implementation of the Code of Conduct for Prevention of Insider Trading.

The composition of the Ethics & Compliance Committee and the details of the Meetings attended by the Directors are given below:


Mr. E. A. Kshirsagar, Chairman


1


1

The Ethics & Compliance Committee met once during the year, on 16th October, 2008.

With effect from 1st January, 2009, the Shareholders’/ Investors’ Grievance Committee has also been mandated to set forth the policies relating to and to oversee the implementation of the Code of Conduct for Prevention of Insider Trading and to review the concerns received under the Tata Code of Conduct. Accordingly, the Ethics & Compliance Committee has ceased to exist from this date.

(iv) Property Committee.

The Property Committee has been constituted to advice the management on unlocking the value of the surplus assets of the Company.

The composition of the Property Committee and the details of the Meetings attended by the Directors are given below:


Mr. B. D. Banerjee, Chairman IndependentNon-Executive

8


6


8

Mr. Bharat Vasani, Member Non-IndependentNon-Executive

8

The Property Committee met 8 times during the year, on 3rd June, 2008; 16th July, 2008; 8th August, 2008; 12th September, 2008; 18th October, 2008; 25th October, 2008; 8th December, 2008 and 26th February, 2009.

33

(v) Board Committee on Corporate Development.

The Board Committee on Corporate Development was constituted to advice the management on development of business plans and future strategies for the Company.

The composition of the Board Committee on Corporate Development and the details of the Meetings attended by the Directors are given below:


Dr. S. Ramanathan, Chairman IndependentNon-Executive

2


2


1


2

The Board Committee on Corporate Development met twice during the year, on 18th July, 2008 and 12th December, 2008.

With effect from 1st January, 2009, the Executive Committee of the Board has been given the additional mandate of advising the management on development of business plans and future strategies for the Company. The Board Committee on Corporate Development, therefore, ceased to exist from this date.

8. General Body Meetings.

(a) Location, date and time of Annual General Meetings held during the last 3 years and special resolutions passed:

Date Location Time Special Resolutions

30th May, 2008 Bombay House Auditorium,Bombay House,Homi Mody Street,Mumbai 400 001.

4.00 p.m. 1. Payment of commission to Directors.

25th May, 2007 Bombay House Auditorium,Bombay House,Homi Mody Street,Mumbai 400 001.

4.00 p.m. 1. Appointment of Mr. V. Shankar as Executive Director.

2. Change in place of keeping registers and records

31st May, 2006 Bombay House Auditorium,Bombay House,Homi Mody Street,Mumbai 400 001.

4.00 p.m. 1. Re-appointment of Dr. V. S. Sohoni as Managing Director

All resolutions moved at the last Annual General Meeting were passed by a show of hands by the requisite majority of shareholders present at the meeting.

(b) No Extra-ordinary General Meeting of the shareholders was held during the year.

(c) No Postal Ballot was conducted during the year. None of the resolutions proposed for the ensuing Annual General Meeting need to be passed by postal ballot.

34

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9. Disclosures.

(a) There are no materially significant related party transactions of the Company which have potential conflict with the interests of the Company at large.

(b) During the year, there were no materially significant related party transactions, i.e. transactions of the Company of material nature with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Declarations have been received from the senior management personnel to this effect.

(c) During the last three years, there were no instances of non-compliance by the Company and no penalty or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to the capital markets.

(d) The Managing Director (CEO) and the EVP – Finance & Legal (CFO) have certified to the Board in accordance with Clause 49 V of the Listing Agreement pertaining to CEO/CFO certification for the Financial Year ended 31st March, 2009.

(e) The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

(f ) The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement relating to Corporate Governance. Further, the Company has adopted the following non-mandatory requirements of the Clause:

The Company has set up the Remuneration Committee as per the provisions of Clause 49.

Half yearly performance of the Company is sent to all shareholders.

The financial statements of the Company are unqualified.

The Company has adopted a Whistle Blower Policy, which has been widely disseminated to all employees in the Company.

Remaining non-mandatory requirements of Clause 49 are expected to be addressed in due course.

10. Means of communication.

(i) The quarterly and the half yearly results, published in the proforma prescribed by the Listing Agreement, are approved and taken on record by the Board of Directors of the Company within one month of the close of the relevant quarter. The approved results are forthwith sent to the Stock Exchanges where the Company’s shares are listed. The results are also published within 48 hours in one English language and one Marathi language newspaper having wide circulation. The results are displayed on the Company’s website, www.rallis.co.in and on the SEBI’s Corpfiling website, www.corpfiling.co.in.

(ii) The Company publishes the audited annual results within the stipulated period of three months from the close of the financial year as required by the Listing Agreement and hence the unaudited results for the last quarter of the financial year are not published.

(iii) The annual audited results are also communicated to the Stock Exchanges where the Company is listed, published in the newspapers and displayed on the Company’s and Corpfiling websites.

(iv) Official news releases and presentations made to Institutional Investors and Analysts are posted on the Company’s website.

(v) The Company sends an annual reminder to shareholders who have not claimed their dividends. Circulars are also sent periodically to shareholders urging them to opt for ECS as the mode for receiving dividends.

(vi) Management Discussion and Analysis Report forms a part of the Annual Report.

35

11. General Shareholder Information.

(i) Annual General Meeting date, time and venue:

29th May, 2009 at 3.30 p.m. at Walchand Hirachand Hall, 4th Floor, Indian Merchants’ Chamber Building, IMC Marg, Churchgate, Mumbai 400 020.

As required under Clause 49 IV G (i), particulars of Directors seeking appointment/re-appointment are given in the Explanatory Statement to the Notice of the Annual General Meeting to be held on 29th May, 2009.

(ii) Financial Calendar : April to March

(iii) Date of book closure : 14th May, 2009 to 29th May, 2009 (both days inclusive)

(iv) Dividend payment date : Within 30 days of 29th May, 2009

(v) Listing on Stock Exchanges : The Company’s Equity Shares are listed on the following Stock Exchanges:

Bombay Stock Exchange Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, 5th Floor Dalal Street Plot No.C/1, G Block Mumbai 400 001. Bandra-Kurla Complex Bandra (E) Mumbai 400 051.

The Company has paid the listing fees to these Stock Exchanges for the year 2008-09.

Stock Code on the Bombay Stock Exchange Limited : 500355

Stock Code on the National Stock Exchange of India Limited : RALLIS EQ

Demat International Security Identification Number (ISIN) : INE613A01012 in NSDL and CDSL for Equity Shares

(vi) Market Information

Market price data: High/Low, Number and Value of shares traded during each month in the last financial year:

Bombay Stock Exchange Limited The National Stock Exchange of India Limited

Month High (Rs.)

Low (Rs.)

No. of Shares Traded

Value of Shares Traded

(Rs. Lacs)

No. of Trades

High (Rs.)

Low (Rs.)

No. of Shares Traded

Value of Shares Traded

(Rs. Lacs)

No. of Trades

April 2008 475.00 325.00 1,17,756 479.98 3,358 485.00 320.30 1,25,090 534.67 4,845

May 2008 459.95 396.05 1,33,238 579.93 2,411 459.95 380.15 3,62,391 1,544.35 3,859

June 2008 446.00 387.00 85,842 364.30 1,906 449.80 380.30 2,80,279 1,180.39 2,491

July 2008 457.90 387.05 5,81,240 2,382.40 2,838 455.00 382.25 2,86,804 1,180.64 3,762

August 2008 600.00 435.00 1,09,000 578.52 3,599 621.00 436.55 1,62,767 872.75 5,800

September 2008 564.00 377.00 82,443 412.83 1,668 584.00 391.00 1,33,159 687.49 2,509

October 2008 449.95 280.20 86,625 327.61 1,748 450.00 287.00 3,92,781 1,400.85 2,700

November 2008 394.00 300.00 74,796 253.99 903 380.00 285.00 16,840 57.22 1,434

December 2008 350.00 280.00 81,449 254.19 1,689 373.00 287.00 1,02,330 327.10 3,265

January 2009 409.90 311.00 1,10,335 406.55 5,182 413.00 275.30 1,20,775 437.38 8,388

February 2009 412.80 337.30 80,054 299.28 3,553 448.00 352.25 95,593 361.17 5,724

March 2009 407.40 344.00 51,788 193.11 2,117 408.10 342.55 98,832 370.15 3,996

36

RALLIS



(vii) Registrar and Transfer Agents:

TSR DARASHAW LTD. 6-10 Haji Moosa Patrawala Industrial Estate, 20 Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011. Tel. No.: 022-6656 8484 Fax No.: 022-6656 8494 E-mail: [email protected] Website: www.tsrdarashaw.com Business Hours: 10.00 a.m. to 3.30 p.m. (Monday to Friday)

37

For the convenience of shareholders based in the following cities, transfer documents and letters will also be accepted at the following Branch Offices/agencies of TSR Darashaw Ltd. (TSRDL):

(a) Branches of TSRDL:

TSR Darashaw Ltd., 503, Barton Centre, (5th Floor),84, Mahatma Gandhi Road,Bangalore 560 001.Tel.: 080-2532 0321Fax: 080-2558 0019Email: [email protected]

TSR Darashaw Ltd.,Tata Centre, 1st Floor,43, J. L. Nehru Road,Kolkata 700 071.Tel.: 033-2288 3087Fax: 033-2288 3062Email: [email protected]

TSR Darashaw Ltd.,2/42, Sant Vihar, Ansari Road, Daryaganj,New Delhi 110 002.Tel.: 011-2327 1805Fax: 011-2327 1802Email: [email protected]

TSR Darashaw Ltd.,Bungalow No. 1, “E” Road,Northern Town, Bistupur,Jamshedpur 831 001.Tel.: 0657-242 6616Fax: 0657-242 6937Email: [email protected]

(b) Agent of TSRDL:

Shah Consultancy Services Ltd.,Sumatinath Complex, 2nd Dhal,Pritam Nagar, Ellisbridge,Ahmedabad 380 006.Telefax: 079-2657 6038Email: [email protected]

(viii) Share Transfer System: Documents for transfer of shares in physical form can be lodged with TSR Darashaw Limited at the registered address or at any of the above mentioned branch offices or at the office of the Agent of TSRDL. The transfers are normally processed within 10-12 days from the date of receipt, if the documents are complete in all respects.

(ix) Distribution of shareholding as on 31st March, 2009:

Holding of Nominal Value: Rs. 10/-

Sr. No. Range HoldingAmount

(Rs.)% to

CapitalNo. of

Holders% to Total

Holders

1 1 to 500 7,68,898 76,88,980 6.42 8,224 92.94

2 501 to 1000 2,44,097 24,40,970 2.04 327 3.69

3 1001 to 2000 1,64,436 16,44,360 1.37 114 1.29

4 2001 to 3000 1,10,476 11,04,760 0.92 44 0.50

5 3001 to 4000 1,04,016 10,40,160 0.87 30 0.34

6 4001 to 5000 99,315 9,93,150 0.83 22 0.25

7 5001 to 10000 1,67,912 16,79,120 1.40 22 0.25

8 Greater than 10000 1,03,25,443 10,32,54,430 86.15 66 0.74

Total 1,19,84,593 11,98,45,930 100.00 8,849 100.00

38

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(x) Shareholding pattern as on 31st March, 2009:

Sr. No. Category of Shareholders Total Holding Percentage

1 Tata Companies 54,17,387 45.20

2 Government/Other Public Financial Institutions and Insurance Companies 2,99,550 2.50

3 Foreign Institutional Investors and Foreign Companies 6,23,019 5.20

4 Non-Resident Individuals 90,546 0.76

5 Other Bodies Corporate and Trust 6,00,383 5.01

6 Nationalized Banks and Mutual Funds 29,14,240 24.32

7 Foreign Banks and Other Banks 350 0.00

8 Individuals 20,39,118 17.01

Total 1,19,84,593 100.00

(xi) Dematerialization of shares and liquidity:

The Company’s shares are compulsorily traded in dematerialized form and are available for trading on both the depositories, viz. National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL).

Percentage of shares held in physical and dematerialized form as on 31st March, 2009:

Physical form : 2.35

Electronic form with NSDL : 94.45

Electronic form with CDSL : 3.20

(xii) Plant locations:

Agrochemicals factories

(i) 15A, MIDC, Turbhe, Thane-Belapur Road, Navi Mumbai 400 703, Maharashtra.

(ii) GIDC Estate, Plot No. 3301, Ankleshwar 393 002, Dist. Bharuch, Gujarat.

(iii) GIDC Estate, Plot No. 2808, Ankleshwar 393 002, Dist. Bharuch, Gujarat.

(iv) GIDC Estate, Plot No. 3000, Ankleshwar 393 002, Dist. Bharuch, Gujarat.

(v) C 5/6, MIDC Industrial Area, Phase III, Shivani, Akola 444 104, Maharashtra.

(vi) Plot No. D-26, Lote Parsuram, MIDC, Near Hotel Vakratunda, Taluka Khed, Dist. Ratnagiri 415 722, Maharashtra.

(vii) IDA, Phase II, Patancheru, Medak Dist., Andhra Pradesh.

Fine Chemical factory

A-14/A Sipcot Industrial Complex, Cuddalore 607 005, Tamilnadu.

(xiii) Investor correspondence address: Rallis India Ltd. Secretarial & Legal Division 15 MIDC Industrial Estate Thane Belapur Road Turbhe Navi Mumbai 400 703

OR TSR Darashaw Ltd. Unit: Rallis India Ltd. 6-10 Haji Moosa Patrawala Industrial Estate, 20 Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011.

39

To,

The Members of Rallis India Limited.

Declaration by the Managing Director under

Clause 49 of the Listing Agreement

I, V. Shankar, Managing Director & CEO of Rallis India Limited hereby declare that all the members of the Board of Directors and senior management personnel have affirmed compliance with the Code of Conduct, as applicable to them, for the year ended 31st March, 2009.

V. Shankar

Managing Director & CEO

Mumbai, 15th April, 2009

CERTIFICATE

TO THE MEMBERS OF

RALLIS INDIA LIMITED

We have examined the compliance of conditions of Corporate Governance by Rallis India Limited, for the year ended 31st March, 2009, as stipulated in Clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance as stipulated in the said Clause. 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 the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For DELOITTE HASKINS AND SELLS Chartered Accountants

Sanjiv V. Pilgaonkar Partner

Membership No. 39826


40

RALLIS



AUDITORS’ REPORT TO THE MEMBERS OF RALLIS INDIA LIMITED

1. We have audited the attached Balance Sheet of RALLIS INDIA LIMITED as at 31st March, 2009, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order 2003, (the Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(e) in our opinion, and to the best of our information and according to the explanations given to us, the said accounts, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

5. On the basis of the written representations from the directors as on 31st March, 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For DELOITTE HASKINS & SELLS

Chartered Accountants

Sanjiv V. Pilgaonkar

Partner



41

ANNEXURE TO THE AUDITORS’ REPORT(Referred to in paragraph 3 of our report of even date)

1. In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of most of its fixed assets.

(b) Most of the Company’s fixed assets were physically verified by the management in accordance with a programme of verification, which provides physical verification of all fixed assets at intervals which in our opinion are reasonable. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

2. In respect of its inventories

(a) As explained to us, inventories, excluding materials in transit and materials lying with third parties, were physically verified by the management at all locations at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. According to information and explanation given to us, Company has not taken or granted any secured or unsecured loan from or to companies, firms or other parties covered by the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clauses (iii) (a) to (iii) (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit and according to the information and explanation given to us, we have neither come across nor have we been informed of any continuing failure to correct major weaknesses in such internal control system.

5. In respect of contracts or arrangements entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) the particulars of contracts or arrangements referred to in Section 301 have been entered in the register required to be maintained under that section; and

(b) in our opinion and having regard to our comments in paragraph 4 above, the transactions exceeding the value of Rupees Five lacs in respect of any party during the year, have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, where such market prices are available.

6. According to the information and explanations given to us:

(a) during the year the Company has not accepted any new deposits from the public within the purview of Sections 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.

(b) the deposits unpaid as at the year end are in the nature of unclaimed deposits; and

(c) no Order under the aforesaid sections has been passed by the Company Law Board or National Company Law Tribunal or the Reserve Bank of India or any court or any other Tribunal in this respect.

7. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respect of its fertilisers and insecticides business pursuant to the Order made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie, the prescribed accounts and records

42

RALLIS



have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company.

9. In respect of statutory and other dues:

(a) In our opinion and according to the information and explanation given to us, the Company has generally been regular in depositing undisputed statutory dues relating to Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Wealth Tax, Investors Education and Protection Fund, Cess and other material statutory dues applicable to it with the appropriate authorities during the year.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty, Wealth Tax, Investors Education and Protection Fund, Cess and other material statutory dues applicable to it, were in arrears, as at 31st March, 2009 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us;

(i) there were no disputed dues as regards Wealth Tax and Cess; and

(ii) details of disputed amounts of Income Tax, Sales Tax, Service Tax, Customs Duty, and Excise Duty which have not been deposited as at the year end are given below:

Name of the Statute

Nature of dues

Amount (Rs. in lacs)

Financial year to which the matter pertains

Forum where pending

Sales Tax Laws Sales Tax (including interest and penalty)

481.94 1998-99, 1999-00, 2000-01, 2001-02 and 2006-07

Joint Commissioner (Appeals)

332.98 1990-91,1998-99, 2000-01 and 2001-02

Additional Commissioner

187.99 1983-84, 1992-93, 1994-95, 1996-97, 1997-98, 1998-99, 1999-00, 2000-01, 2001-02, 2002-03 and 2003-04

Deputy Commissioner

79.04 1993-94, 1998-99, 1997-98 ,1999-00, 2001-02, 2003-04, 2004-05 and 2007-08

Assistant Commissioner

140.84 1992-93, 1994-95, 1997-98, 1998-99, 1999-00, 2000-01, 2001-02 and 2002-03

Tribunal

46.66 1990-91, 1995-96, 1996-97, 1997-98 and 1998-99

Commercial Tax Officer

Finance Act, 1994 Service Tax 1.50 2001-02 and 2006-07 Assistant Commissioner

Customs Act, 1962 Custom Duty 144.10 1990-91 High CourtCentral Excise Act, 1944

Excise duty (including Interest and Penalty)

65.66 1988 to 1992, 2001-02 and 2005-06

Commissioner

62.80 1999-2001 Joint Commissioner8.48 1999-00 Deputy Commissioner

935.46 1986-87, 1990-91 and 1996 to 2002

Tribunal

Income Tax Act, 1961

Income tax (including interest)

139.61 Asst. Yr. 2005-06, 2006-07

Commissioner of Income Tax (Appeals)

43

10. The Company does not have any accumulated losses as at the year end. The Company has not incurred cash losses during the financial year covered by our audit and in immediately preceding financial year.

11. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and/or banks. There were no amounts outstanding on account of debentures during the year.

12. In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Order are not applicable to the Company.

13. In our opinion and according to the information and explanations given to us, the Company is not a chit fund, nidhi or a mutual benefit society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanation given to us, the Company has given a guarantee for a loan taken by its subsidiary from a bank. Having regard to the explanation that the subsidiary is wholly owned, in our opinion, the terms and conditions of the guarantee are not prima facie prejudicial to the interest of the Company.

16. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company for the purposes for which the loans were obtained, other than temporary deployment pending application.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short term basis have, prima facie, not been used during the year for long term investment.

18. According to the information and explanations given to us, the Company has not made preferential allotment of shares during the period covered by our audit. Therefore, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

19. According to the information and explanations given to us, there are no amounts outstanding in respect of secured debentures as at the year end. Therefore, the provisions of clause 4(xix) of the Order are not applicable to the Company.

20. According to the information and explanation given to us, the Company has not raised any money by public issue, during the period covered by our audit.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For DELOITTE HASKINS & SELLS

Chartered Accountants

Sanjiv V. Pilgaonkar

Partner



44

RALLIS


BALANCE SHEET AS AT 31ST MARCH, 2009Rs. lacs

ScheduleNo.

As at31st March, 2009


SOURCES OF FUNDSSHAREHOLDERS’ FUNDS Capital 1 9,998.48 9,998.48 Reserves and Surplus 2 24,869.21 20,755.43

34,867.69 30,753.91 LOAN FUNDS Secured Loans 3 2,481.09 3,735.31 Unsecured Loans 4 5,573.99 8,055.08 653.92 4,389.23

TOTAL 42,922.77 35,143.14

APPLICATION OF FUNDSFIXED ASSETS Gross Block 33,765.65 29,603.96 Less: Accumulated Depreciation/Amortisation 17,906.82 16,141.24

Net Block 5 15,858.83 13,462.72 Capital Work-in-Progress at cost, including capital advances

2,907.05

1,324.70

18,765.88 14,787.42 INVESTMENTS 6 13,615.68 5,551.18 DEFERRED TAX ASSETS 1,015.80 1,322.80 (Refer Note No.15 in Schedule 20)CURRENT ASSETS, LOANS AND ADVANCES Inventories 7 14,727.22 14,545.39 Sundry Debtors 8 11,436.56 10,116.40 Cash and Bank Balances 9 715.19 753.04 Other Current Assets 10 112.59 79.26 Loans and Advances 11 7,735.74 7,936.88

34,727.30 33,430.97

LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 12 19,511.43 14,095.47 Provisions 13 6,402.97 5,926.51

25,914.40 20,021.98

NET CURRENT ASSETS 8,812.90 13,408.99

MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) 14 712.51 72.75

TOTAL 42,922.77 35,143.14

Notes to the Accounts 20

Schedules referred to above form an integral part of the Balance Sheet and should be read in conjunction therewith.In terms of our Report of even date.

For DELOITTE HASKINS & SELLSChartered Accountants

SANJIV V. PILGAONKARPartner


HOMI R. KHUSROKHAN

}B. D. BANERJEEE. A. KSHIRSAGARS. RAMANATHAN

DirectorsPRAKASH R. RASTOGIBHARAT VASANIVENKATRAO S. SOHONIK. P. PRABHAKARAN NAIR

R. GOPALAKRISHNAN Chairman

V. SHANKAR Managing Director

P. S. MEHERHOMJI GM – Legal & Company Secretary

Please check thoroughly. Vakils will not be responsible for errors not noted on this proof.

45

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. lacs

ScheduleNo.

For the year ended31st March, 2009


INCOMETurnover (Gross) 90,683.33 73,966.06 Less: Excise Duty 7,398.81 6,858.63

Turnover (Net) – (Refer Note No.17 in Schedule 20) 83,284.52 67,107.43 Other Income 15 2,262.38 11,163.30

85,546.90 78,270.73 EXPENDITUREMaterials Consumed 16 44,867.35 34,396.97 Purchase of Finished Goods (Refer Note No. 20(b) in Schedule 20) 16 5,977.86 7,240.23 (Increase)/Decrease in Closing Stock of Finished Goods and Work in Process

17 (288.40) (792.78)

Operating Expenses 18 21,768.71 20,392.97 Interest Charges 19 325.58 408.85 Depreciation/Amortisation (Refer Note No.31 in Schedule 20) 2,294.93 2,007.04

74,946.03 63,653.28

PROFIT BEFORE TAXATION 10,600.87 14,617.45 Provision for Taxation— Current Tax (2,934.00) (2,033.10)— For prior years (reversed) (59.00) – — Deferred Tax – adjustments (net) (Refer Note No. 15 in Schedule 20)

(307.00) 101.28

— Fringe Benefits Tax (171.50) (3,471.50) (166.24) (2,098.06)

PROFIT AFTER TAXATION 7,129.37 12,519.39 Profit and Loss Appropriation Account

Balance brought forward from previous year 14,919.97 6,668.11

22,049.34 19,187.50 APPROPRIATIONSTransfer to/(from): Proposed Preference Dividend 660.00 660.00 Distribution Tax on Proposed Preference Dividend 112.17 112.17 Proposed Equity Dividend 1,917.53 1,917.53 Distribution Tax on Proposed Equity Dividend 325.89 325.89 General Reserve 712.94 1,251.94 Balance carried to Balance Sheet 18,320.81 14,919.97

22,049.34 19,187.50

Basic and Diluted Earnings per share Rs. (Refer Note No. 24 in Schedule 20) 53.04 98.02 Nominal value per share in Rs. 10.00 10.00 Notes to the Accounts 20

Schedules referred to above form an integral part of the Profit and Loss Account and should be read in conjunction therewith In terms of our Report of even date.




HOMI R. KHUSROKHAN






46

RALLIS


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. lacs



A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before Taxation 10,600.87 14,617.45

Adjustments for:

Depreciation 2,294.93 2,007.04

Interest (Net) 299.69 365.91

Voluntary Retirement Compensation - Amortised 397.48 140.75

Income from Investments (254.32) (159.23)

Provision for Leave Encashment 86.38 78.32

Provision for Supplemental Payments (2.46) 63.38

Provision for Gratuity 355.54 151.46

Waiver of Loan under Sales Tax Deferral Scheme (95.62) –

(Profit)/Loss on Sale of Assets (net) (includes assets w/off ) 168.59 (8,709.70)

Unrealised foreign exchange translation loss/(gain) on borrowings 21.46 7.58

(Profit)/Loss on Sale of Investments (net) (3.30) 3,268.37 (117.13) (6,171.62)

Operating Profit before working capital changes 13,869.24 8,445.83

Adjustments for:

Trade and other Receivables (1,169.04) (915.91)

Inventories (181.83) (2,193.69)

Trade Payables 5,402.07 4,051.20 (7,121.75) (10,231.35)

CASH GENERATED FROM OPERATIONS 17,920.44 (1,785.52)

Direct Taxes paid (Net of refund received) (3,077.48) (2,593.76)

Voluntary Retirement Compensation (1,037.24) –

NET CASH FROM OPERATING ACTIVITIES (A) 13,805.72 (4,379.28)

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (6,557.51) (2,693.32)

Proceeds on Sale of Fixed Assets 115.53 9,019.71

Purchase of Investments (19,733.37) (12,274.11)

Proceeds on Sale of Investments 11,672.18 10,012.67

Deposits pledged with Banks and Government Authorities 17.78 (9.52)

Interest/Dividend received 246.88 173.01

Proceeds on reduction of Fixed Deposit with maturity greater than 3 months – 0.03

NET CASH FROM/(USED IN) INVESTING ACTIVITIES (B) (14,238.51) 4,228.47


47

Schedules referred to above form an integral part of the Cash Flow Statement and should be read in conjunction therewith In terms of our Report of even date.




HOMI R. KHUSROKHAN






Rs. lacs



C. CASH FLOW FROM FINANCING ACTIVITIES :

Long Term Borrowing repaid (182.58) (230.55)

Long Term Borrowing taken 93.02 78.33

(Repayment) of /Proceeds from Short Term Borrowings (Net) 3,829.57 1,054.74

Interest paid (323.33) (405.55)

Dividend and taxes thereon paid (3,015.59) (1,893.88)

NET CASH FROM/(USED IN) FINANCING ACTIVITIES (C) 401.09 (1,396.91)

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (A) + (B) + (C) (31.70) (1,547.72)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

Cash in Hand 5.47 11.20

Balances with Scheduled Banks on Current Account 608.13 2,150.12

613.60 2,161.32

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR


Balances with Scheduled Banks on Current Account 547.08 608.13

581.90 613.60

Notes to the Accounts – see Schedule No. 20

Footnotes :

Cash and cash equivalents as above 581.90 613.60

Restricted Bank Balance 30.59 18.96

Balances with Scheduled Banks; On Fixed Deposit Accounts (over three months maturity) 9.22 31.03

On Fixed Deposit as Margin Money against Bank Guarantees 93.48 102.70 89.45 120.48

CASH AND BANK BALANCES AS PER SCHDULE 9 715.19 753.04

48

RALLIS


SCHEDULES 1 TO 20 FORMING PART OF THE ACCOUNTSRs. lacs



SCHEDULE 1. CAPITAL :-

Authorised :

50,000,000 Equity Shares of Rs. 10/- each 5,000.00 5,000.00

150,000,000 Cumulative Redeemable Preference Shares of Rs. 10/- each 15,000.00 15,000.00

20,000.00 20,000.00

Issued and Subscribed :

11,984,593 Equity Shares of Rs. 10/- each fully paid-up 1,198.46 1,198.46

Add: Amount paid-up on forfeited shares 0.02 0.02

1,198.48 1,198.48

88,000,000 7.5% Cumulative Redeemable Preference Shares of Rs. 10/- each fully paid-up 8,800.00 8,800.00

9,998.48 9,998.48

Notes: (1) Of the above Equity Shares, 2,604,140 shares of Rs. 10/- each were allotted as fully paid-up pursuant to contracts without payment being received in cash and 1,144,700 shares of Rs. 10/- each were issued as fully paid-up Bonus Shares by capitalisation from General Reserve.

(2) 88,000,000 7.5% Cumulative Redeemable Preference Shares of Rs. 10/- each, of an aggregate value of Rs. 880,000,000/- were allotted on a “Private Placement” basis on 3rd February, 2004 and redemption is due on 3rd August, 2009.

SCHEDULE 2. RESERVES AND SURPLUS :-

Rs. lacs

As at31st March,

2008

Additions Deductions As at31st March,

2009

As at31st March,

2007


2008

Capital Reserve 1,680.93 – – 1,680.93 1,680.93 – – 1,680.93

Capital Subsidy 63.58 – – 63.58 63.58 – – 63.58

Investment Allowance Reserve 17.80 – – 17.80 17.80 – – 17.80

Reserve under Sec. 45IC of the RBI Act, 1934 10.39

– – 10.39 10.39 – – 10.39

General Reserve 4,062.76 712.94 – 4,775.70 2,737.69 1,325.07 – 4,062.76

5,835.46 712.94 – 6,548.40 4,510.39 1,325.07 – 5,835.46

Profit & Loss Account 14,919.97 7,129.37 3,728.53 18,320.81 6,668.11 12,519.39 4,267.53 14,919.97

20,755.43 7,842.31 3,728.53 24,869.21 11,178.50 13,844.46 4,267.53 20,755.43


49

Rs. lacs

As at31st March,

2009

As at31st March,

2008

SCHEDULE 3. SECURED LOANS :-(Refer Note Nos. 7 and 8 in Schedule 20)Loans from Banks : Bank overdrafts and temporary loans 2,454.59 3,603.58 Loans from entities other than Banks and 26.50 131.73 Financial Institutions(Note : Amount repayable within one year in respect of loans other than bank overdrafts Rs. 776.83 lacs; Previous Year Rs. 100.25 lacs)

2,481.09 3,735.31

SCHEDULE 4. UNSECURED LOANS :-

Short Term Loan From Banks 5,000.00 –Other Loans and advances 169.46 188.29Loan under Sales Tax Deferral Scheme 404.53 465.63 (Note : Amount repayable within one year Rs. 5,035.21 lacs; Previous Year Rs. 29.22 lacs)

5,573.99 653.92

Schedule 5. FIXED ASSETS :- (Refer Note Nos. 4, 8 and 31 in Schedule No. 20)

Rs. lacs

Gross Block (at cost) Depreciation/Amortisation Net Block

As at 31st March,

2008

Additions

Deductions As at 31st March,

2009

As at 31st March,

2008

For the year

Deductions during the

year

As at 31st March,

2009

As at 31st March,

2009

As at 31st March,

2008

Intangible Assets

Software 764.57 183.66 – 948.23 592.46 153.02 – 745.48 202.75 172.11 Goodwill 163.63 – – 163.63 163.63 – – 163.63 – –Registration Studies – 493.25 – 493.25 – 123.31 – 123.31 369.94 –

Total Intangible Assets 928.20 676.91 – 1,605.11 756.09 276.33 – 1,032.42 572.69 172.11

Tangible Assets

Freehold Land 255.16 1,705.54 – 1,960.70 – – – – 1,960.70 255.16 Leasehold Land 597.33 – 1.08 596.25 74.94 5.97 0.16 80.75 515.50 522.39 Buildings (see footnote 1 and 2)

6,358.34 348.53 329.84 6,377.03 2,331.17 180.31 173.08 2,338.40 4,038.63 4,027.17

Plant and Machinery 19,667.67 2,111.72 386.77 21,392.62 12,413.05 1,656.00 309.97 13,759.08 7,633.54 7,254.62 Furniture, Fixtures and Office Equipments

739.32 32.85 20.31 751.86 320.00 72.52 7.92 384.60 367.26 419.32

Vehicles (see footnote 3) 1,057.94 99.61 75.47 1,082.08 245.99 103.80 38.22 311.57 770.51 811.95 Total Tangible Assets 28,675.76 4,298.25 813.47 32,160.54 15,385.15 2,018.60 529.35 16,874.40 15,286.14 13,290.61

Total 29,603.96 4,975.16 813.47 33,765.65 16,141.24 2,294.93 529.35 17,906.82 15,858.83 13,462.72

Previous Year 28,501.44 1,845.17 742.65 29,603.96 14,566.84 2,007.04 432.64 16,141.24 13,462.72

Footnotes :

1. Cost of buildings include cost of 50 shares (Previous year 50 shares) of Rs. 50/- each fully paid and cost of 5 shares (Previous Year 5 Shares) of Rs. 100/- each fully paid in respect of ownership flats in 7 (Previous Year 7) Co-operative Societies.

2. Buildings include an asset having a gross block of Rs. 181.63 lacs (Previous Year Rs. 181.63 lacs) and net block of Rs. 133.02 lacs (Previous Year Rs. 135.98 lacs) being cost of share in Co-operative Housing Society.

3. Vehicles include assets taken under hire purchase agreements costing Rs. 707.46 lacs (Previous Year Rs. 741.15) and having written down value aggregating Rs. 476.26 lacs. (Previous Year Rs. 568.44).

50

RALLIS


Rs. lacs

Nos. NominalValue Rs.

As at 31st March,

2009

As at 31st March,

2008

SCHEDULE 6. INVESTMENTS :-

LONG TERM

(at cost less provision for diminution in value)

(I) Investment in Subsidiary Company

Rallis Australasia Pty. Ltd. (wholly owned subsidiary) (Nominal value of AUD 1 each) 1,000 0.35 0.35

A 0.35 0.35

(II) Trade Investments

(Unquoted – Fully paid):

Aich Aar Chemicals Pvt. Ltd. – Equity Shares 124,002 10 9.31 9.31

Biotech Consortium India Ltd. – Equity Shares 50,000 10 5.00 5.00

Indian Potash Ltd. – Equity Shares 54,000 10 0.90 0.90

6.50% Bengal Chamber of Commerce & Industry – Debentures (Re. 1) 6 1,000 – –

Bharuch Enviro Infrastructure Ltd. – Equity Shares 36,750 10 3.68 3.68

Bharuch Eco-Acqua Infrastructure Ltd. – Equity Shares 181,814 10 18.17 18.17

Sipcot Industries Common Utilities Ltd. – Equity Shares (Re. 1) 113 100 – –

Patancheru Enviro-Tech Ltd. – Equity Shares 10,822 10 1.08 1.08

Advinus Therapeutics Pvt. Ltd. – Equity Shares 18,286,000 10 1,828.60 1,828.60

4.25% Advinus Therapeutics Pvt. Ltd. – Non-Convertible Debentures (Refer Note No. 27 in Schedule 20) 88,000 1,000 880.00 880.00

B 2,746.74 2,746.74

(Unquoted – Partly paid):

(Refer Note No. 2(c) in Schedule 20)

Bharuch Eco-Acqua Infrastructure Ltd. – Equity Shares (Rs. 6.34 paid-up) 118,550 10 7.52 7.52

C 7.52 7.52

D=B+C 2,754.26 2,754.26


51

Rs. lacs

Nos. NominalValue

Rs.

As at 31st March,

2009

As at 31st March,

2008

SCHEDULE 6. INVESTMENTS :- (Contd.)

(III) Non-Trade Investments (Quoted – Fully paid): (see footnote 1) Spartek Ceramics India Ltd. – Equity Shares (Re. 1) 7,226 10 – – Nagarjuna Finance Ltd. – Equity Shares (Re. 1) 400 10 – – Pharmaceuticals Products of India Limited – Equity

Shares (Re. 1) 10,000 10 – – 14% Spartek Ceramics India Limited-Debentures –

Redeemable Partly Convertible (Re. 1) 560 60 – – Ispat Alloys Ltd. – Equity Shares (Re. 1) 504 10 – – J.K. Cement Ltd. – Equity Shares (Re. 1) 44 10 – – Uniscans & Sonics Ltd. – Equity Shares (Re. 1) 96 10 – –

E – –

(Unquoted – Fully paid):

Amba Trading Company Limited – Equity Shares 130,000 10 53.32 53.32 Associated Inds. (Assam) Ltd. – Equity Shares (Re. 1) 30,000 10 – – Caps Rallis (Private) Ltd. (Nominal value of

Zim. $ 2 each) – Equity Shares 2,100,000 146.30 146.30

F 199.62 199.62

G=E+F 199.62 199.62

TOTAL LONG TERM INVESTMENTS H = A+D+G 2,954.23 2,954.23

CURRENT INVESTMENTS

(Lower of the cost and fair value)(Refer Note No. 26 in Schedule 20)Units of Mutual Funds (see footnote 2) Tata Floater Fund – Daily Dividend 42,944,151 10 4,309.70 – ICICI Prudential Flexi Income Plan Premium – Daily Dividend 40,281,243 10 4,259.15 – Tata Liquid Super High Investment Fund – Daily Dividend 206,504 1,000 2,301.52 – Tata Floating Rate Fund Long Term - Income/Bonus 27,745,675 10 – 2,805.87

TOTAL CURRENT INVESTMENTS I 10,870.37 2,805.87

TOTAL J=H+I 13,824.60 5,760.10

Less: Provision for diminution in value 208.92 208.92

GRAND TOTAL 13,615.68 5,551.18

Aggregate Book Value of Investments :Unquoted – At cost less Provision for diminution in value 13,615.68 5,551.18 Quoted – At cost less Provision for diminution in value – –

13,615.68 5,551.18

Footnotes:1. Market value of quoted investments Rs. 0.08 lacs (Previous Year Rs. 0.70 lacs).2. Net assets value of units of mutual funds Rs. 10,870.37 lacs (Previous Year Rs. 2,811.14 lacs).

52

RALLIS


Rs. lacs



SCHEDULE 7. INVENTORIES :-

(Refer Note Nos. 6, 7(a), 20(a) and 20(b) in Schedule 20)

(Valued at lower of the cost and net realisable value)

Stores and Spare Parts 92.19 115.35

Stock-in-trade :

Raw Materials (Including goods in transit of Rs. 762.28 lacs; Previous Year Rs. 1,244.77 lacs) 5,163.10 5,282.65

Packing Material 635.40 599.26

Work-in-Process 800.40 724.59

Finished Goods 8,036.13 14,635.03 7,823.54 14,430.04

14,727.22 14,545.39

SCHEDULE 8. SUNDRY DEBTORS :-

(Considered good, unless otherwise stated)

(Refer Note Nos. 2(b), 2(f ), 6, 7(a) and 10 in Schedule 20)

(a) Debts outstanding for a period exceeding six months:

(i) Considered Good

Secured 32.24 56.46

Unsecured 1,214.02 638.12

(ii) Considered Doubtful

Unsecured 3,296.80 4,543.06 5,366.66 6,061.24

(b) Other Debts:

(i) Considered Good

Secured 361.67 471.68

Unsecured 9,828.63 10,190.30 8,950.14 9,421.82

Gross Debtors 14,733.36 15,483.06

Less: Provision for doubtful debts 3,296.80 5,366.66

11,436.56 10,116.40

SCHEDULE 9. CASH AND BANK BALANCES :-

Cash in Hand (including cheques in Hand of Rs. 29.76 lacs;Previous Year Rs. nil) 34.82 5.47

Balances with Scheduled Banks:

On Current Accounts 577.67 627.09

On Fixed Deposit Accounts 9.22 31.03


715.19 753.04

SCHEDULE 10. OTHER CURRENT ASSETS :-

Interest Accrued on Investments 112.59 79.26

112.59 79.26


53

Rs. lacs



SCHEDULE 11. LOANS AND ADVANCES :-(Unsecured, considered good unless otherwise stated)(Refer Note No. 10 in Schedule 20)

Advances recoverable in cash or in kind or for value to be received 2,972.71 3,010.35 Advances/Deposits considered doubtful of recovery 4,327.96 4,134.15 Less: Provision for doubtful advances/deposits 4,327.96 – 4,134.15 –

Balances with Customs, Port Trust and Central Excise 1,868.66 1,982.14 Advance Income Tax (net of provision) 2,891.12 2,936.89 Advance Fringe Benefit Tax (net of provision) 3.25 7.50

7,735.74 7,936.88

SCHEDULE 12. CURRENT LIABILITIES :-Acceptances – 397.27 Sundry Creditors (Refer Note No. 5 in Schedule 20) Dues to Micro Small and Medium Enterprises (including

interest Rs. 26.96 lacs ; Previous Year Rs. 25.22 lacs) 127.85 557.60

Other Creditors 16,300.19 9,813.05 Liability towards Investor Education and Protection Fund: Unclaimed Dividends 27.00 15.37 Unclaimed Interest on Debentures 1.69 1.69 Unclaimed Fixed Deposits 0.87 0.87 Unclaimed Interest on Fixed Deposits 1.03 30.59 1.03 18.96

Customers’ security deposits, credit balances and advance against supplies and services to be rendered 2,498.15 2,043.55 Interest accrued but not due on loans 20.10 17.85 Other Liabilities 534.55 1,247.19

19,511.43 14,095.47

SCHEDULE 13. PROVISIONS :-Proposed Equity Dividend 1,917.53 1,917.53 Distribution Tax on Proposed Equity Dividend 325.89 325.89 Proposed Preference Dividend 660.00 660.00 Distribution Tax on Proposed Preference Dividend 112.17 112.17 Provision for Fringe Benefit Tax (Net of advance tax) 13.97 13.97 Provision for Income Tax (Net of advance tax) 696.87 659.87 Provision for Gratuity (Refer Note No. 30 in Schedule 20) 632.82 277.28 Provision for Leave Encashment 473.25 386.87 Provision for Pension under Voluntary Retirement Schemes 3.30 3.30 Provision for Supplemental Payments on Retirement (Refer Note No. 30 in Schedule 20) 1,567.17 1,569.63

6,402.97 5,926.51

SCHEDULE 14. MISCELLANEOUS EXPENDITURE :-(to the extent not written off or adjusted)Voluntary Retirement Compensation 712.51 72.75

712.51 72.75

54

RALLIS


Rs. lacsFor the year ended31st March, 2009


SCHEDULE 15. OTHER INCOME :-

From OperationsExcise and Duty Drawback Claims 651.11 586.84 Scrap and Sundry Sales 516.36 640.39 Commission 105.01 114.43 Cash Discount 148.29 253.72 Sundry Income (Refer Note No. 14 in Schedule 20) 524.31 1,945.08 512.83 2,108.21

Others(Refer Note No. 32 in Schedule 20)Profit/(Loss) on Sale of Investments (net) 3.30 117.13 Profit/(Loss) on Sale of Fixed Assets (net) – 8,709.70 Rent 33.79 26.09 Interest Income : Trade Accounts 0.88 – Interest on term and fixed deposits (Amount is gross of

TDS of Rs. 3.55 lacs ; Previous Year Rs. 1.23 lacs) 25.01 25.89 42.94 42.94

Income from Investments : Dividend from Trade Investments Long Term 1.96 1.92 Dividend from Other Current Investments 181.64 59.52 Interest from Trade Investments – Long Term (Amount is

gross of TDS of Rs. 8.47 lacs; Previous Year Rs. 14.90 lacs) 70.72 254.32 97.79 159.23

317.30 9,055.09

2,262.38 11,163.30

SCHEDULE 16. MATERIALS CONSUMED :-(Refer Note No. 11,19 and 23 in Schedule 20)Raw Materials Consumed Opening Stock 5,282.65 3,980.36 Add: Purchases 41,903.66 32,930.17 Less: Closing Stock 5,163.10 42,023.21 5,282.65 31,627.88

Packing Materials Consumed 2,844.14 2,769.09

44,867.35 34,396.97

SCHEDULE 17. (INCREASE)/DECREASE IN CLOSING STOCKS OF FINISHED GOODS AND WORK-IN-PROCESS :- (Refer Note No. 20(a) and 20(b) in Schedule 20)Opening Stock Finished Goods 7,823.54 7,349.88 Work in Process 724.59 8,548.13 405.47 7,755.35

Closing Stock Finished Goods 8,036.13 7,823.54 Work in Process 800.40 8,836.53 724.59 8,548.13

(288.40) (792.78)


55



SCHEDULE 18. OPERATING EXPENSES :-(Refer Note No. 8, 9, 11, 13(a), 13(b), 14 and 23 in Schedule 20)

Personnel Cost : Salaries, Wages, Commission, Bonus etc. 5,426.70 4,661.44

Gratuity 486.60 386.61

Voluntary Retirement Compensation Amortised 397.48 140.75

Staff Provident, Superannuation and Other Funds 382.31 344.10

Staff Welfare 580.76 7,273.85 601.98 6,134.88

Freight, Handling and Packing 1,918.35 1,961.42

Processing 565.95 562.41

Changes in Excise Duty on Inventory of Finished Goods (107.84) (12.04)

Travelling 512.19 541.52

Power and Fuel 1,960.10 2,123.51

Brand Equity Contribution 111.97 93.08

Repairs :

Repairs to Machinery 289.95 287.31

Repairs to Buildings 61.03 75.89

Other Repairs 289.38 640.36 285.07 648.27

Stores and Spares Consumed 354.07 362.45

Rates and Taxes 196.27 295.53

Bad Debts written off 2,003.51 1,153.74

Cash Discount 1,412.80 1,929.69

Commission 341.31 211.85

Insurance 109.86 118.23

Rent 632.92 820.14

Bank Charges 530.93 362.12

Directors’ Fees & Commission 96.80 84.95

Provision for Doubtful Debts/Advances for the year 198.34 205.03

Less: Provision Written Back against doubtful debts 2,003.51 (1,805.17) 1,153.74 (948.71)

Selling Expenses 1,129.28 878.69

Legal and Professional Expenses 574.35 726.73

Loss on Sale of Fixed Assets (net) 168.59 –

Other Expenses 3,148.26 2,344.51

21,768.71 20,392.97

SCHEDULE 19. INTEREST CHARGE :-

Loans for Fixed Term 5.37 26.29 Other Interest 320.21 382.56

325.58 408.85

56

RALLIS


Schedule 20: NOTES TO THE ACCOUNTS :-

1. Significant Accounting Policies :-

(a) Basis of Accounting

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards referred to in section 211(3C) of the Companies Act, 1956. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(b) Use of Estimates

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management’s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(c) Fixed Assets and Depreciation/Amortisation

(i) Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalised up to the date when the asset is ready for its intended use.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase. Extra shift depreciation is applied to applicable items of plant and machinery for days additional shifts are worked. Freehold land is not depreciated since it is deemed to have an indefinite economic life. The premium paid for acquiring leasehold land is amortised over the period of lease on a straight line basis.

(ii) Intangible assets and amortisation

Intangible assets other than goodwill are valued at cost less amortisation. These generally comprise of costs incurred to acquire computer software licences and implement the software for internal use (including software coding, installation, testing and certain data conversion).

Research costs are charged to earnings as they arise.

Costs incurred for applying research results or other knowledge to develop new products, are capitalised to the extent that these products are expected to generate future financial benefits. Other development costs are expensed as and when they arise.

Goodwill comprises the portion of a purchase price for an acquisition that exceeds the market value of the identifiable assets, with deductions for liabilities, calculated on the date of acquisition, on the share in the acquired company’s assets acquired by the Company.

Intangible assets are reported at acquisition value with deductions for accumulated amortisation and any impairment losses.

Amortisation takes place on a straight line basis over the asset’s anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible asset is expected to be used and generally does not exceed 10 years.

An impairment test of intangible assets is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is reported in the Profit and Loss Account.

(d) Impairment of assets

The carrying values of assets of the Company’s cash-generating units are reviewed for impairment annually or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts

57

of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

(e) Investments

Long term investments are valued at cost, less provision for diminution other than temporary, in value, if any. Current investments are valued at the lower of cost and fair value.

(f) Inventory

Inventories are valued at the lower of the cost and the net realisable value.

In the case of raw materials, packing materials, stores and spare parts and traded finished goods, cost are determined in accordance with the continuous moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs.

Cost of finished goods and work-in-progress are determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(g) Revenue Recognition

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Income recognition for services takes place as and when the services are performed.

(h) Financial Income and Borrowing Cost

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(i) Foreign Currency Transactions

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Profit and Loss Account.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are valued at year end rates, and unrealised translation differences are included in the Profit and Loss Account.

Investments in foreign currency (non-monetary items) are reported using the exchange rate at the date of the transaction.

The Company’s forward exchange contracts are not held for trading or speculation. The premium/discount arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Profit and Loss Account.

(j) Employee Benefits

(i) Short Term

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long Term

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

58

RALLIS


• Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fund, family pension fund and superannuation fund. The Company’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

• Defined-benefit plans

Expenses for defined-benefit gratuity and supplemental payment plans are calculated as at the balance sheet date by independent actuaries in a manner that distributes expenses over the employee’s working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees.

(iii) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(k) Deferred Revenue Expenditure

Expenditure incurred on voluntary retirement schemes is being amortised on a straight line basis over the estimated period of payback which does not exceed five years. The period of deferral does not extend beyond 31st March, 2010.

(l) Taxes on Income

The Company’s income taxes include taxes on the Company’s taxable profits, fringe benefits tax, adjustment attributable to earlier periods and changes in deferred taxes. Valuation of all tax liabilities/receivables is conducted at nominal amounts and in accordance with enacted tax regulations and tax rates or in the case of deferred taxes, those that have been substantially enacted.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

(m) Lease Accounting

(i) Operating Leases

Lease of an asset whereby the lessor essentially remains the owner of the asset is classified as operating lease. The payments made by the Company as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.

(ii) Finance Leases

Assets taken on finance lease after 1st April, 2001, are capitalised at fair value or net present value of the minimum lease payments, whichever is lower.

59

Depreciation on the assets taken on lease is charged at the rate applicable to similar type of fixed assets as per the Company’s accounting policy on depreciation as stated above. If the leased assets are returnable to the lessor on the expiry of the lease period, depreciation is charged in accordance with the Company’s depreciation policy as stated above or in a straight line basis over the lease period, which ever is shorter.

Lease payments made are apportioned between the finance charges and reduction of the outstanding liability in respect of assets taken on lease.

(n) Segment Reporting

The accounting policies adopted for segment reporting are in line with the accounting policy of the Company. Segment Revenue, Segment Expenses, Segment Assets and Segment Liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis, have been included under “Unallocated Revenue/Expenses/Assets/Liabilities”.

(o) Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

(p) Cash Flow Statements

Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting Standard (AS) 3 – Cash Flow Statements as prescribed under Section 211(3C) of the Indian Companies Act 1956.

(q) Cash and Cash Equivalents

Cash and bank balances and current investments that have insignificant risk of change in value, which have durations up to three months, are included in the Company’s cash and cash equivalents in the Cash Flow Statement.

(r) Earnings per Share

Basic Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares in issue during the year.

Rs. lacs

As at 31st March,

2009

As at 31st March,

2008

2. Contingent Liabilities :-

(a) Demand contested by the Company

– Sales tax 1,651.18 1,637.50

– Excise duty 378.77 1,211.86

– Customs Duty 144.10 144.10

– Income Tax 1,455.55 1,315.94

– Service tax 1.85 1.85

– Property cases 63.56 63.56

– Labour cases 197.86 184.39

– Other Cases 536.87 535.73

– Number of cases where amount is not quantifiable 26 Nos.; (Previous Year 28 Nos.)

(b) Bills discounted 987.36 2,092.84

(c) Uncalled partly paid shares held as Investments 4.34 4.34

(d) A guarantee of Rs. 273.12 lacs (Previous Year Rs. 273.12 lacs) has been issued by the Company at the request of its wholly owned subsidiary in favour of its lending bank.

60

RALLIS


(e) Other guarantees given to Government authorities for which the Company is contingently liable to Rs. 85.80 lacs (Previous Year Rs. 132.16 lacs).

(f ) Recourse guarantee amounting to Rs. NIL (Previous Year Rs. 453.00 lacs) has been given by the Company in respect of channel finance provided to its dealers by banks.

The Company does not expect any liability in respect of item (a), (b), (d), (e) and (f ) to devolve in respect of its exposure and therefore no provision has been made in respect thereof.

3. Estimated amount of contracts remaining to be executed on capital account is Rs. 1,703.28 lacs (Previous Year Rs. 1,852.54 lacs) including advances paid aggregating Rs. 1,083.94 lacs (Previous Year Rs. 238.57 lacs).

4. Fixed assets include Rs. 769.52 lacs (Previous Year Rs. 821.81 lacs) representing the book value of assets held for disposal. The Management expects to recover amounts higher than the carrying value of these assets.

5. Amount payable to Micro, Small and Medium Enterprises are as follows:

a. The total amount of delayed payments during the year aggregated to Rs. 514.02 lacs in respect of 117 parties (Previous Year Rs. 4,034.79 lacs in respect of 79 parties with amounts ranging from Rs. 0.01 lac to Rs. 701.17 lacs) with amounts ranging from Rs. 0.01 lac to Rs. 61.74 lacs.

b. The amount of principal outstanding in respect of the above as at Balance Sheet date is Rs. 100.89 lacs in respect of 30 parties (Previous Year Rs. 532.38 lacs in respect of 38 parties with amounts ranging from Rs. 0.03 lac to Rs. 410.10 lacs) with amounts ranging from Rs. 0.06 lac to Rs. 17.66 lacs.

c. The total interest payable on account of delayed payment aggregates to Rs. 26.96 lacs (Previous Year Rs. 25.22 lacs) and this entire amount was outstanding as at the year end.

6. The charge in favour of the Company’s bankers by way of hypothecation of stocks and receivables has been created to secure guarantees executed and bank overdraft and temporary loan facilities granted by the bankers in the normal course of business.

7. Secured Loans :-

a. Bank overdrafts and temporary loans have been secured by a first charge by way of hypothecation of stocks and receivables.

b. Loans from others on account of purchase of vehicles have been secured by way of hypothecation of vehicles.

8. The Company has held certain equipments under a non-cancellable operating lease. The Company’s future lease rentals under the operating lease arrangements as at the year end are as under:

Rs. lacs

Future Lease Rentals 31.03.2009 31.03.2008

Within 1 year – 232.24

Over 1 year but less than 5 years – –

More than 5 years – –

Amount charged to Profit and Loss Account (as part of rent) 234.47 309.65

The lease terms do not contain any exceptional/restrictive covenants nor are there any options given to Company to renew the lease or purchase the equipments. The agreements provide for changes in the rentals if taxes are leviable on such rentals change. With effect from 15.04.08 Sales Tax rates increased to 5% from 4%.

Premises are taken by the Company on operating leases that are cancellable.

The Company has acquired certain vehicles under hire purchase arrangements. These arrangements are non-cancellable.

The fair value of such assets aggregates Rs. 476.26 lacs (Previous Year Rs. 568.44 lacs). The total minimum lease payments (MLP) in respect thereof and present value of future lease payments, discounted at the interest rates implicit in the lease are as follows:

Rs. lacs

Due

31.03.2009 31.03.2008

MLP MLP

Principal Interest Total Principal Interest Total

Within 1 Year 26.17 0.79 26.96 100.25 6.78 107.03

Over 1 year but less than 5 years 0.33 0.01 0.34 31.48 0.79 32.25

61

The legal title in the said vehicles remains with the Company. The hire purchase arrangements provides for revision of hire purchase instalments in the event of changes in taxes, if any, leviable on hire purchase instalments.

The terms of hire purchases do not contain any exceptional/restrictive covenants.

9. Other Expenses include :-Rs. lacs

Auditors’ Remuneration 2008-09 2007-08

Audit Fees 46.98 46.98

Tax Audit 10.00 10.00

Fees for Company Law Matters 0.25 0.25

Fees for other services 53.56 49.85

Reimbursement of out-of-pocket expenses – 0.79

Service tax which is being claimed for set-off as input credit has not been included in the expenditure above.

10. “Sundry Debtors” include Rs. 1,062.87 lacs (Previous Year Rs. 487.08 lacs), being amounts receivable from a company under the same Management, Rallis Australasia Pty. Ltd. (RAPL) (wholly owned subsidiary).

Also, included in “Loans and Advances” is a sum of Rs. Nil (Previous Year Rs. Nil) being amounts loaned to RAPL. The maximum amount outstanding during the year was Rs. Nil (Previous Year Rs. 35.83 lacs).

11. Consumption of raw materials, packing materials and stores and spare parts includes provisions of Rs. 280.95 lacs (Previous Year Rs. 310.49 lacs) for slow, non-moving and damaged stocks.

12. The Company has incurred the following expenses on research and development activity:Rs. lacs

2008-08 2007-08

On tangible fixed assets 18.59 41.91

On items which have been expensed during the year * 231.69 491.70

Total 250.28 533.61

* includes amount of Rs. 51.02 lacs (Previous Year Rs. 72.67 lacs) paid to an external agency.

During the year the Company has also incurred Rs. 762.22 lacs (Previous Year Rs. 148.00 lacs) towards product development and registration which is included under Capital Work In Progress (CWIP). Total amount included in CWIP Rs. 910.22 lacs (Previous Year Rs. 148.00 lacs).

13. (a) Computation of net profit in accordance with Section 198 of the Companies Act, 1956 :-

Rs. lacs

2008-09 2007-08

Profit for the year before taxation 10,600.87 14,617.45

Add:

Provision for doubtful debts and advances 198.34 205.03

Managerial remuneration 157.77 356.11 217.15 422.18

10,956.98 15,039.63

Less:

Brought forward loss from previous year 348.14

Capital profit on sale of fixed/capital assets 8,955.25

Bad debts and advances 2,003.51 2,003.51 1,153.74 10,457.13

Net Profit/(Loss) under section 198 of the Companies Act, 1956 8,953.47 4,582.50

62

RALLIS


(i) Managing Director : Rs. 35.00 lacs

(ii) Non-Whole Time Directors : Rs. 35.00 lacs

The Company has been legally advised that for the purpose of calculating profit/loss under Section 349/350, depreciation should not be included in the excess of expenditure over income. The net profit/loss under Section 198 of the Companies Act has accordingly been reworked retrospectively and the figures disclosed above are based on the recomputation.

(b) Directors’ remuneration :-

Rs. lacs

2008-09 2007-08

Salary 27.60 105.28

Contribution to Provident & Superannuation fund 7.46 6.60

Other benefits in cash and kind 25.91 20.32

60.97 132.20


95.97 167.20

Commission to Non-Whole Time Directors 35.00 35.00

Directors’ Fees 26.80 14.95

157.77 217.15

The remuneration reported above excludes contributions to gratuity fund and provision for leave encashment since the same are ascertained on an aggregated basis for the Company as a whole by way of actuarial valuation and separate values attributable to the executive directors are not available.

14. “Operating Expenses includes net loss of Rs. 452.87 Lacs (Previous Year net gain Rs. 60.27 lacs grouped under “Other Income”) on account of foreign currency translation differences.

15. Deferred tax assets and liabilities :-

The components of deferred tax assets and liabilities are as under:

Rs. lacs

Components

As at 31st March,

2009

As at 31st March,

2008

Deferred Tax Assets

On Provision against debts and advances 2,592.49 3,229.32

On other items 210.62 131.50

Total 2,803.11 3,360.82

Deferred Tax Liabilities

On fiscal allowance on fixed assets 1,787.31 2,038.02

Total 1,787.31 2,038.02

Net Deferred Tax Asset Recognised 1,015.80 1,322.80

The sum of Rs. 307.00 lacs (Previous Year Rs. 101.28 lacs was credited) has been debited to the Profit and Loss Account.

16. Segment Reporting :-

The Company has determined its business segment as “Agri - Inputs” comprising of Pesticides, Plant Growth Nutrients and Seeds. The other business segment comprises “Fine Chemicals” and is non-reportable.

63

a. Primary Segment InformationRs. lacs

Business Segments

Agri-Inputs Others (non-

reportable)

Total

REVENUE

Total External Revenue 84,659.73 603.66 85,263.39

77,128.81 822.62 77,951.43

Total Inter-Segment Revenue – – –

Segment Revenue 84,659.73 603.66 85,263.39

77,128.81 822.62 77,951.43

Unallocable Revenue 283.51

319.30

Total Revenue (A) 85,546.90

78,270.73

RESULTS

Segment Results (B) 10,774.32 (9.86) 10,764.46

14,829.94 44.48 14,876.42

Unallocable Income (Net of unallocable expenses) 161.99

151.88

Operating Profit/(Loss) 10,926.45

15,026.30

Interest Expenses 325.58

408.85

Profit/(Loss) before taxation 10,600.87

14,617.45

Taxation (3,471.50)

(2,098.06)

Profit/(Loss) after taxation 7,129.37

12,519.39

OTHER INFORMATION

ASSETS

Segment Assets (C) 49,914.16 572.06 50,486.22

44,523.67 671.07 45,194.74

Unallocated assets 18,350.95

9,970.38

Total Assets 68,837.17

55,165,12

LIABILITIES

Segment Liabilities (D) 20,549.88 67.62 20,617.50

14,675.49 84.13 14,759.62

Unallocated Liabilities 13,351.98

9,651.59

Total Liabilities 33,969.48

24,411.21

64

RALLIS


Rs. lacs

Business Segments

Agri-Inputs Others (non-

reportable)

Total

CAPITAL EXPENDITURE

Total Cost incurred during the year to acquire Segment Assets (E) 6,557.51 – 6,557.51

2,693.32 – 2,693.32

Unallocated Capital Expenditure –

–

Total Cost incurred during the year to acquire assets 6,557.51

2,693.32

DEPRECIATION

Segment Depreciation (F) 2,265.95 28.98 2,294.93

1,972.12 34.92 2,007.04

Unallocated Depreciation –

–

Total Depreciation 2,294.93

2,007.04

NON-CASH EXPENSES

Segment Non-Cash expenses other than Depreciation/ Amortisation (G) 397.48 – 397.48

140.75 – 140.75

Unallocable Non-Cash expenses –

–

Total Non-Cash expenses 397.48

140.75

Figures in italics relate to the previous year.

b. Secondary Segment Information

Rs. lacs

2008-09 2007-08

1. Segment Revenue

(a) India 55,789.28 61,559.00

(b) Outside India 29,474.11 16,392.43

Total 85,263.39 77,951.43

2. Segment Assets

(a) India 42,198.42 41,216.90

(b) Outside India 8,287.80 3,977.84

Total 50,486.22 45,194.74


All tangible and intangible fixed assets of the Company are situated in India and therefore cost incurred during the year for acquisition of such assets under different geographic segments is not furnished.

65

Footnotes:

(i) Unallocable assets include Deferred Tax Assets, Investments, Advance Income Tax, Advance Fringe Benefits Tax, Interest Accrued on Investments and Miscellaneous Expenditure to the extent not written off.

(ii) Unallocable liabilities includes Secured Loans, Unsecured Loans, Provisions for Equity Dividend and tax thereon, Provisions for Preference Dividend and tax thereon, Provision for Supplemental Payments on Retirement, Provision for Pension under Voluntary Retirement Schemes, and Provision for Income and Fringe Benefit Tax.

(iii) Unallocable income includes income from investment activities.

(iv) Unallocable expenditure includes charge in respect of Supplemental Payments on Retirement valued on actuarial basis.

17. Turnover :-

Rs. lacs

2008-09 2007-08

Units Quantity Value Quantity Value

Pesticides Tonnes 13,452 88,159.63

16,84770,402.29

KL. Ltr. 8,606 8,876

Plant Growth Nutrients Tonnes 850 1,142.15 1,143 1,232.20

Seeds Tonnes 205 884.38 980 1,626.19

Tanning Materials Tonnes 684 497.17 1,057 705.38

90,683.33 73,966.06

Less: Excise Duty 7,398.81 6,858.63

Net Turnover 83,284.52 67,107.43

18. Related Party Disclosures :-

Disclosure as required by Accounting Standard (AS) – 18 “Related Party Disclosures” as prescribed under Section 211(3C) of the Companies Act, 1956.

(a) Names of the related parties and description of relationship :

(i) Promoters: Tata Tea Limited

Tata Sons Limited

Tata Chemicals Limited

Tata Investment Corporation Limited

Ewart Investments Limited

(ii) Subsidiary Company: Rallis Australasia Pty. Ltd.

(iii) Key Management Personnel: Mr. V. Shankar – Managing Director

} }

66

RALLIS


(b) Details of Transactions :

Rs. lacs

Nature of Transactions Subsidiary Company

Promoters Key Management Personnel

Total

Purchase of Goods – 287.93 – 287.93

– 156.68 – 156.68

Sales of Goods 1,052.84 583.48 – 1,636.32

333.23 935.47 – 1,268.70

Interest Income – – – –

1.22 – – 1.22

Subscription to Share Capital – – – –

– – – –

Loans Given – – – –

– – – –

Loans Repaid – – – –

34.50 – – 34.50

Services Received – 27.19 – 27.19

– 37.20 – 37.20

Other Expenses – 2.70 – 2.70

– 90.68 – 90.68

Dividend Paid (Equity) – 866.78 – 866.78

– 435.79 – 435.79

Dividend Paid (Preference) – 277.50 – 277.50

– 277.50 – 277.50

Guarantees given – – – –

– – – –

Debit Balance outstanding as on 31.03.2009 – Other Receivables 1,062.87 6.18 – 1,069.05

487.08 55.61 – 542.69

Credit Balance outstanding as on 31.03.2009 – Other Payables – 53.34 – 53.34

– 5.80 – 5.80

Guarantee outstanding as on 31.03.2009 192.38 – – 192.38

521.91 – – 521.91

Investment as on 31.03.2009 0.35 – – 0.35

0.35 – – 0.35

Remuneration Paid

Dr. V. S. Sohoni – – – –

– – 79.84 79.84

Mr. V. Shankar – – 95.97 95.97

– – 52.36 52.36


67

Transactions included in (b) above which are in excess of 10% of the total related party transactions of the same type are given below :

Rs. lacs

Nature of Transactions Rallis Australasia Pty. Ltd.

Tata Chemicals Ltd.

Tata Tea Ltd. Tata Sons Ltd .

Purchase of Goods – 287.93 – –

– 156.68 – –

Sales of Goods 1,052.84 583.48 – –

333.23 935.47 – –

Interest Income – – – –

1.22 – – –

Subscription to Share Capital – – – –

– – – –

Loans Given – – – –

– – – –

Loans Repaid – – – –

34.50 – – –

Services Received – – – 27.19

– – – 37.20

Other Expenses – – – 2.70

– – – 90.68

Dividend Paid (Equity) – 180.24 470.20 144.12

– 90.12 235.10 72.06

Dividend Paid (Preference) – 187.50 90.00 –

– 187.50 90.00 –

Guarantees given – – – –

– – – –


19. Quantitative and value analysis of materials consumed :-

Units 2008-09 2007-08

Quantity

ValueRs. lacs

Quantity

ValueRs. lacs

Active Ingredients for pesticides Tonnes 1,885 13,301.73 3,477 9,043.50

KL 460 1,135.04 469 831.84

Other Chemicals Tonnes 35,169 25,750.42 41,160 19,393.75

KL 519 1,836.02 1,363 2,358.79

42,023.21 31,627.88

68

RALLIS


20. (a) Licensed/installed capacities, production and stocks of goods manufactured :-

Units Installed Production Opening Stocks Closing Stocks

Capacity Quantity Quantity ValueRs. lacs

Quantity ValueRs. lacs

Pesticides

Solids Tonnes 15,590 9,834 2,068 5,196.48 1,731 6,132.81

Tonnes 22,000 13,297 1,954 3,505.29 2,068 5,196.48

Liquids KL 11,100 8,368 677 1,451.10 655 1,470.90

KL 17,600 7,871 959 1,794.17 677 1,451.10

Plant Growth Nutrients Tonnes N.A. 726 288 104.80 304 91.76

Tonnes N.A. 398 355 124.06 288 104.80

Total 6,752.38 7,695.47

5,423.52 6,752.39

Footnotes :

(i) Licensed Capacity – Delicensed vide Gazette Notification No. S.O.477(E) dated 25.07.1991.

(ii) Figures in italics are in respect of the previous year.

(iii) Production figures are net of free issues, free replacements made against breakage, time expiry stocks, sample issues and captive consumption.

(iv) Production includes quantities manufactured at sub-contracting plants. Installed capacity represents Company’s in-house facilities.

(v) N.A. = Not Applicable.

(b) Purchase, sales and stock of goods traded :-

Units Purchases Opening Stocks Closing Stocks

Quantity

ValueRs. lacs

Quantity

ValueRs. lacs

Quantity

ValueRs. lacs

a. Pesticides Tonnes 2,962 2,959.87 390 239.51 145 85.68

KL 243 1,665.67 55 446.16 17 123.60

Tonnes 3,626 2,740.31 470 686.35 390 239.51

KL 653 2,947.18 159 683.26 55 446.16

b. Plant Growth Nutrients Tonnes – – 452 30.51 374 4.43

KL 82 180.69 35 64.21 15 28.05

Tonnes – – 1,034 145.40 452 30.52

KL 112 204.95 – – 35 64.21

c. Seeds Tonnes 242 760.60 525 110.96 40 5.17

Tonnes 837 783.60 823 200.45 525 110.96

d. Tanning Materials Tonnes 653 411.04 183 179.80 151 93.73

Tonnes 1,023 564.19 218 210.90 183 179.80

Total 5,977.86 1,071.15 340.66

7,240.23 1,926.36 1,071.15

Footnotes :

(i) Figures in italics are in respect of the previous year.

(ii) Purchases are net of free issues, free replacements made against breakage, time expiry stocks, sample issues and captive consumption.

69

21. Value of imports on C.I.F. basis :-

Rs. lacs

2008-09 2007-08

Raw Materials 24,277.88 14,902.49

Components, stores and spare parts 28.30 10.36

Capital Goods 229.02 58.89

Trading Goods 1,615.83 1,081.03

26,151.03 16,052.77

22. Expenditure in foreign currency :-

Rs. lacs

2008-09 2007-08

Interest 11.44 21.18

Professional Consultancy Charges 16.82 13.03

Other Matters 372.11 279.12

400.37 313.33

23. Value of Imported and Indigenous Materials consumed :-

Rs. lacs

2008-09 2007-08

Amount % Amount %

Raw Materials

Imported (Including Customs Duty) 24,016.98 57% 14,656.28 46%

Indigenous 18,006.23 43% 16,971,60 54%

Total 42,023.21 100% 31,627.88 100%

Packing Materials

Imported (Including Customs Duty) – – – –

Indigenous 2,844.13 100% 2,769.09 100%

Total 2,844.13 100% 2,769.09 100%

Spare Parts & Components

Imported (Including Customs Duty) 56.77 16% 12.99 3%

Indigenous 297.30 84% 349.46 97%

Total 354.07 100% 362.45 100%

24. Earnings per Share :-Rs. lacs

2008-09 2007-08

(i) Net Profit After Tax 7,129.37 12,519.39

Less: Preference dividend including tax thereon 772.17 772.17

Profit attributable to Equity Shareholders 6,357.20 11,747.22

(ii) Weighted average No. of Equity Share for Basic/Diluted EPS (Nos.) 11,984,593 11,984,593

(iii) Nominal Value of Equity Per Share 10 10

(iv) Basic/Diluted Earning Per Share (in Rs.) 53.04 98.02

70

RALLIS


25. Earnings in foreign exchange :-Rs. lacs

2008-09 2007-08

Export of Goods on F.O.B. Basis 28,905.81 15,901.61


Freight, insurance and other matters 463.29 376.39

29,474.11 16,392.43

26. Statement of purchase and sales of units of mutual funds :-

Rs. lacs

2008-09 2007-08

Particulars of Investment No. of Units Cost No. of Units Cost

(a) Acquired and disposed off during the year

Tata Floater Fund – Growth – – 47,901,949 5,500.00

Prudential ICICI Flexi Inc.Plan – Dividend 37,83,043 400.00 – –

Tata Liquid SHIP Fund – Dividend 2,60,313 2,901.24 – –

Prudential ICICI Liquid SIP – Dividend 2,85,03,588 2,850.50 – –

Tata Floater Fund – Dividend 2,64,85,457 2,657.97 28,295,712 2,839.64

(b) Acquired during the year and retained as at the year end

Tata Floater Fund – Dividend 4,29,44,151 4,309.70 – –

Prudential ICICI Flexi Inc.Plan – Dividend 4,02,81,243 4,259.14 – –

Tata Liquid SHIP Fund – Dividend 2,06,504 2,301.53 – –

Tata Floating Rate Fund Long term Income/Bonus – – 27,745,675 2,805.87

(c) Sold out of Acquisition of an earlier year

Tata Floating Rate Fund – Growth 2,82,72,105 2,862.47 – –

Tata Fixed Horizon Fund Series – – – –

Tata Fixed Horizon Fund Series 8 – Scheme-F Periodic – Dividend Institution Plan – – 5,000,000 500.00

Tata Fixed Horizon Fund Series 9 – Scheme-E Periodic – Dividend Institution Plan – – 5,000,000 500.00

Tata Liquid Super High Investment Fund – Growth – – 41,412 554.73

27. The Company has invested Rs. 880.00 lacs in Non-Convertible Debentures (NCDs) of Advinus Therapeutics Pvt. Ltd. The NCDs carry a coupon rate of 4.25% and will be redeemed in three equal instalments in the years 2011, 2012 and 2013 at a premium of 25%. Income recognised during the year includes Rs. 33.32 lacs (Previous Year Rs. 33.32 lacs) in respect of redemption premium determined on the basis of the Internal Rate of Return.

71

28. Foreign Currency Exposures :-

The year end foreign currency exposures that were not hedged by a derivative instrument or otherwise are given below.

a. Amounts receivable in foreign currency on account of the following :-

Particulars As at

31.03.2009 31.03.2008

Rs. lacs Fx million Rs. lacs Fx million

Export of goods and services 7,273.40 USD 12.18 3,894.80 USD 6.79

AUD 3.06 AUD 1.33

EUR 0.03 EUR 1.08

Sale of rights – – 83.04 USD 0.21

Investment in subsidiary company 0.35 AUD 0.001 0.35 AUD 0.001

Amounts payable in foreign currency on account of the following :-

Particulars As at

31.03.2009 31.03.2008


ECB Loans 750.66 USD 1.48 260.20 USD 0.65

Import of goods and services 5,253.97 USD 8.98 2,676.86 USD 6.15

– EUR 0.10

JPY 136.64 JPY 35.50

– GBP 0.0003

Packing Credit Loan (PCFC) – – 2,717.55 USD 6.51

– – – EUR 0.17

Customer advances 183.61 USD 0.36 127.10 USD 0.32

Note: Fx = Foreign Currency; USD = US Dollar; EUR = Euro; JPY = Japanese Yen; GBP = British Pound; AUD = Austrialian Dollar.

b. Derivative Instruments

The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company’s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company’s Risk Management Policy. The Company does not use forward contracts for speculative purposes.

Outstanding Forward Exchange Contracts entered into by the Company :-

As at No. of Contracts

Amount in (million)

INR (Rs. lacs)

Purpose

31.03.2009 6 USD 4.28 2,169.29 To hedge accounts receivable and payable in foreign currency.

9 JPY 267.90 1,373.07

31.03.2008 3 USD 0.53 213.13

29. Remittance in foreign currency on account of dividends :-Rs. lacs

2008-09 2007-08

Year to which it relates to 2007-08 2006-07

Number of non-resident shareholders 1 1

Number of shares of Rs. 10/- each 93,816 312,754

Amount remitted (Rs. lacs) 15.01 25.02

72

RALLIS


30. Employee Benefit Obligations :-

Defined-Contribution Plans

The Company makes contribution towards provident fund, family pension fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trustees of Rallis India Limited Provident Fund Trust, the family pension fund is administered by the Government of India and the superannuation fund is administered by the Life Insurance Corporation of India. Under the schemes, the Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefit. The Rules of the Company’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared by the Employees’ Provident Fund by the Government under para 60 of the Employees’ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

A sum of Rs. 382.31 lacs (Previous Year Rs. 344.10 lacs) has been charged to the revenue account in this respect.

Defined–Benefits Plans

The Company offers its employees defined-benefit plans in the form of a gratuity scheme (a lump sum amount) and a supplemental pay scheme (a life long pension). Benefits under the defined benefit plans are typically based either on years of service and the employee’s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees, while supplemental pay plan covers certain executives. In the case of the gratuity scheme, the Company contributes funds to Gratuity Trust, which is irrevocable, while the supplemental pay scheme is not funded. Commitments are actuarially determined at year-end. On adoption of the revised Accounting Standard, (AS) - 15 on “Employee Benefits” prescribed under Section 211(3C) of the Indian Companies Act 1956, actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the profit and loss account.

The net value of the defined-benefit commitment is detailed below : Rs. lacs

Gratuity (Funded

Plan)

Supple-mental Pay (Unfunded

Plan)

Total Gratuity (Funded

Plan)

Supple- mental Pay (Unfunded

Plan)

Total

2008-09 2007-08

Present Value of Commitments 1,238.59 1,567.17 2,805.76 1,138.26 1,569.63 2,707.89

Fair Value of Plans 605.77 – 605.77 860.98 – 860.98

Net liability in the balance sheet 632.82 1,567.17 2,199.99 277.28 1,569.63 1,846.91

Defined benefit commitments : Rs. lacs

Gratuity (Funded

Plan)


Plan)


Plan)


Plan)

Total

2008-09 2007-08

Opening balance as at 1st April, 2008 1,138.26 1,569.63 2,707.89 806.41 1,506.25 2,312.66

Benefits earned during the year – – – – – –

Current Service Cost 66.84 14.14 80.98 75.76 16.32 92.08

Interest expenses 87.19 129.62 216.81 63.86 123.76 187.62

Paid benefits (302.73) (117.63) (420.36) (112.02) (100.53) (212.55)

Actuarial (gain)/loss 249.03 (28.59) 220.44 304.25 23.83 328.08

Closing balance as at 31st March, 2009 1,238.59 1,567.17 2,805.76 1,138.26 1,569.63 2,707.89

73

Plan assets : Gratuity Rs. lacs

2008-09 2007-08

Opening balance as at 1st April, 2008 860.98 558.15

Expected return on scheme assets 62.54 59.36

Contributions by the Company 131.06 222.15

Paid funds (302.72) (102.71)

Actuarial gain/(loss) (146.09) (2.09)

Balance with the Trust as at 31st March, 2009 605.77 734.86

Funds lying with the Trust as at 31st March, 2009 – 126.12

Closing balance as at 31st March, 2009 605.77 860.98

Return on plan assets : Gratuity Rs. lacs

2008-09 2007-08

Expected return on plan assets 62.54 59.36

Actuarial gain/(loss) (146.07) (2.09)

Actual return on plan assets (83.54) –

Expenses on defined benefit plan : Rs. lacs

Gratuity (Funded

Plan)


Plan)


Plan)


Plan)

Total

2008-09 2007-08

Current service costs 66.84 14.14 80.98 75.76 16.32 92.08

Past service cost – – – – – –

Interest expense 87.19 129.62 216.81 63.86 123.76 187.62

Expected return on investment (62.54) – (62.54) (59.36) – (59.36)

Net actuarial (gain)/loss 395.11 (28.59) 366.52 306.35 23.83 330.18

Expenses charged to the profit and loss account 486.60 115.17 601.77 386.61 163.91 550.52

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment’s size, funding requirements and pension expense.

2008-09 2007-08

Rate for discounting liabilities 8.00% p.a. 8.50% p.a.

Expected salary increase rate 6.00% p.a. 6.00% p.a.

Expected pension increase rate 6.00% p.a. 6.00% p.a.

Expected return on scheme assets 8.00% p.a. 8.00% p.a.

Mortality rates LIC 1994-96 ultimate table LIC 1994-96 ultimate table

74

RALLIS


Experience adjustment : (a) Gratuity Rs. lacs

2008-09 2007-08 2006-07Defined benefit obligation 1,238.59 1,138.26 806.41Plan asset 605.77 860.98 558.15Experience adjustment on plan assets (146.08) * *Experience adjustment on plan liabilities 25.81 * *

(b) Supplemental Pay Rs. lacs

2008-09 2007-08 2006-07Defined benefit obligation 1,567.17 1,569.63 1,506.25Plan asset – – –Experience adjustment on plan assets – – –Experience adjustment on plan liabilities (79.49) * *

The Company adopted AS15 w.e.f. 1st April, 2006.

* The figures in respect of previous two periods are not available.

The estimates of future salary increases, considered in the actuarial valuation, taken into account of inflation, security, promotion and other relevant factors such as supply and demand in the employment market.

The contributions expected to be made by the Company during the financial year 2009-10 amounted to Rs. 68.11 lacs.

The plan assets are managed by the Gratuity Trust formed by the Company. The management of funds is entrusted with the Life Insurance Corporation of India and HDFC Standard Life Insurance Company Limited. The details of investments made by them are not available.

31. Accelerated Depreciation :- During the year, on the basis of estimates of the Company’s technical staff, the Company has accelerated its depreciation

charge on certain facilities which were used for manufacture of products which are currently discontinued. These assets have been brought down to the terminal value and the rates applied are numerous and cannot be meaningfully listed in the financial statements. As a result the depreciation charge for the year is higher by Rs. 598.49 lacs and the profit for the year, after adjusting the reduction in deferred tax liability of Rs. 203.42 lacs, lower by Rs. 395.06 lacs.

32. Profit on sale of assets includes a profit of Rs. Nil on sale of land and building (Previous Year Rs. 8,741.76 lacs).

33. Provision held in respect of indirect tax matters in dispute: Rs. lacs

Particulars 2008-09 2007-08Opening Balance 25.21 –Provisions made during the year 274.33 66.21Total 299.54 66.21Payments made adjusted against above sum (114.33) (41.00)Closing Balance 185.21 25.21

34. Previous year’s figures have been regrouped/restated wherever necessary to conform to the classification of the current

Signature to Schedules 1 to 20


HOMI R. KHUSROKHAN






75

Balance Sheet Abstract & Company's General Business Profile:

I. Registration Details

Registration No. 1 4 0 8 3 State Code 1 1

Balance Sheet Date 3 1 0 3 2 0 0 9Date Month Year

II. Capital Raised during the Year (Amount in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private PlacementN I L N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities (including Current Liabilities) Total Assets

6 8 8 3 7 1 7 6 8 8 3 7 1 7

Sources of Funds

Paid-up Capital Reserves & Surplus

9 9 9 8 4 8 2 4 8 6 9 2 1

Secured Loans Unsecured Loans

2 4 8 1 0 9 5 5 7 3 9 9

Application of Funds

Net Fixed Assets Investments

1 8 7 6 5 8 8 1 3 6 1 5 6 8

Net Current Assets Misc. Expenditure

8 8 1 2 9 0 7 1 2 5 1

Accumulated Losses Deferred Tax Assets

N I L 1 0 1 5 8 0

IV. Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

8 5 5 4 6 9 0 7 4 9 4 6 0 3

+ – Profit Before Tax + – Profit After Tax

1 0 6 0 0 8 7 7 1 2 9 3 7

Earnings per Share Rs. Dividend Rate %

5 3 . 0 4 1 6 0

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)Item Code No. (ITC Code)

3 8 0 8 2 0 - 0 9 H E X A C O N Z O L E

3 8 0 8 1 0 - 2 9 A C E P H A T E

3 8 0 8 2 0 - 9 0 M E T C O N A Z O L E

76

RALLIS



ANNEXURE TO THE DIRECTORS’ REPORTINFORMATION AS PER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2009Sr. No.

Name Designation/ Nature of duties

Gross Remu- neration receivedRs.

NetRemu-neration

Rs.

Qualifications Expe- rience(Years)

Date of commence-ment of employment

Age(Years)

Particulars of last employment/employer and position held

1 2 3 4 5 6 7 8 9 10A. Employed throughout the year and in receipt of remuneration aggregating not less than Rs. 24,00,000/- for the year ended 31st March, 2009.1 Mr. V Shankar Managing Director

& CEO 9,597,306 3,505,743 B.Com. (Hons),

FCA AICWA, ACS, L.L.B

29 1-Dec-05 52 Tata Chemicals Ltd. Chief Operating Officer, Phosphates

2 Mr. Brij S Uberoi EVP – Corporate Affairs

3,941,289 1,795,197 B.E. (Hons.) M.B.A.

35 27-May-74 59 N.A.

3 Mr. Ashok K Shetty Chief Operating Officer – Agri Business

4,412,660 2,396,202 B.Sc. (Agri), P.G.D.M. (Agri)

36 6-Apr-98 58 Shaw Wallace G.M. (Sales & Marketing)

4 Mr. D K Sundar EVP – Finance & Legal

3,663,469 1,368,337 AICWA, ACS 29 29-Nov-07 51 Tata Chemicals Ltd.General Manager – Sales & Marketing

5 Mr. Shashi Kapoor Chief Internal Auditor

2,720,250 1,539,478 C.A. 37 16-Aug-05 57 Honeywell Automation India Ltd.Head (Corporate Audit)

6 Mr. Sunil K Chaturvedi Vice President – Domestic Sales

3,662,431 2,360,736 B.Sc. 40 1-Nov-01 59 Doctoranywhere.com pvt. Ltd., Vice President

7 Mr. K Amuthan Vice President – HR & Business Excellence

3,378,352 2,055,287 B.E. (Electronic) 26 15-Dec-07 49 Tata Sons Ltd.Vice PresidentManagement Development

8 Mr. K B Belliappa Vice President – Planning & Logistics

2,761,773 1,737,366 M.Sc. 30 19-Oct-79 55 N.A.

9 Mr. K R Venkatadri Vice President – International Business

4,777,390 2,995,536 B.E. (Mech.) P.G.D.M.

19 1-Oct-06 43 Tata Chemicals Ltd., Senior Manager – Strategy & Business Development

10 Mr. Pasham V Reddy Head – Business Excellence

2,417,510 1,606,261 B.Sc. 27 1-May-82 52 N.A.

B. Employed for part of the year in respect of remuneration aggregating not less than Rs. 2,00,000/- per month.1 Dr. Durgadas C

MansharamaniEVP – Technology & Business

2,295,456 1,693,081 M.Sc.(Chemistry) Phd.

39 22-Oct-99 60 Gharda ChemicalsDirector Business Development

2 Dr. U K Khandeparkar Vice President – Manufacturing

1,634,765 1,171,571 Phd. 25 8-Aug-05 52 Hikal Ltd.Senior G.M.

3 Mr. Sanjeev S Jagtap Vice President – Finance

1,268,790 964,697 AICWA 29 3-Dec-01 48 Gharda Chemicals, Dy GM – Finance & Accounts

4 Mr. Rajanish R Natu Head – Projects 665,305 548,027 M.E. 18 29-Sep-06 41 Raptakos, Brett & Co. Ltd.D.G.M. (Projects)

5 Mr. Ninan Joseph Vice President – Key Accounts

3,029,130 1,533,565 B.Sc. 36 6-Jan-97 60 Lupin AgrochemicalsSr. Regional Manager

6 Mr. Sanjay K Jha Head – Business Excellence

543,068 460,556 B.E. 19 4-Mar-03 42 AirtelManager (Quality)

7 Ms. Pratibha S Gaunekar G M International Business

1,682,926 1,140,132 M.A. 36 15-Dec-89 60 Orson ElectronicsManager (Imports)

8 Mr. Gopal Ganesan Depot Incharge 342,551 316,405 B.Com 29 16-Apr-79 55 N.A.9 Mr. HPS Chawla Regional Manager

Accounts 525,050 429,176 M.B.A. 15 5-Jun-93 43 N.A.

10 Mr. G Suresh Kumar Goud Officer Sales 219,966 209,432 M.A.B.M. 2 1-Jun-06 28 N.A.11 Mr. Surendra Kumar Hans

Raj SharmaSr. Officer Sales 289,081 266,467 B.Sc. 20 1-May-95 45 Tropical Agro System Ltd.

Jr. Sales Representative12 Dr. Nagraj Koneripalli EVP – Technology

& Business Development

310,966 185,393 Phd. 20 1-Mar-09 41 Tata Advanced Materials Ltd., Vice President – Aerospace Division

Notes :1 Gross remuneration received includes salary, allowances, leave travel expenses, medical benefits in accordance with Company’s rules, Company’s

contribution to provident and superannuation funds, monetary value of the perquisites calculated in accordance with the Income Tax Act, 1961 and the Rules made thereunder but excludes contribution to Gratuity Fund on the basis of actuarial valuation as separate figures are not available & amount paid towards Voluntary Retirement Scheme.

2 Net remuneration is gross remuneration less taxes, contribution to provident and superannuation funds and value of perquisites.3 The employees have adequate experience to discharge responsibilities assigned to them.4 None of the employees are relatives of the Directors of the Company.5 The nature of employment is contractual.

On behalf of the Board of Directors

R. GOPALAKRISHNANMumbai, 15th April, 2009 Chairman

77

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF RALLIS INDIA LIMITED

1. We have audited the attached Consolidated Balance Sheet of RALLIS INDIA LIMITED (“the Company”) and its subsidiary (the Company and its subsidiaries constitute “the Group”) as at 31st March, 2009, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement of the Group for year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of one subsidiary whose financial statements reflect total assets (net) of Rs. 332.09 lacs as at 31st March, 2009, total revenues of Rs. 1,448.70 lacs and net cash inflows of Rs. 14.43 lacs for the year ended on that date. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion, insofar as they relate to the amounts included in respect of the said subsidiary are solely based on the report of the other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of the Accounting Standards (AS) 21, “Consolidated Financial Statements”, AS 23, “Accounting for Investments in Associates in Consolidated Financial Statements” and AS 27, “Financial Reporting of Interests in Joint Ventures”, referred to in Section 211(3C) of the Companies Act, 1956.

5. Based on our audit and on consideration of report of other auditor on separate financial statements and on the other financial information of the subsidiary and to the best of our information and according to the explanations given to us, we are of the opinion that the attached Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2009;

(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.


Sanjiv V. PilgaonkarPartner

(Membership No. 39826)Mumbai , 15th April, 2009

78

RALLIS


CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2009Rs. lacs

ScheduleNo.



SOURCES OF FUNDSSHAREHOLDERS’ FUNDS Capital 1 9,998.48 9,998.48 Reserves and Surplus 2 24,975.41 20,781.14

34,973.89 30,779.62 LOAN FUNDS Secured Loans 3 2,481.09 3,735.31 Unsecured Loans 4 5,766.37 927.04

8,247.46 4,662.35

TOTAL 43,221.35 35,441.97

APPLICATION OF FUNDSFIXED ASSETS Gross Block 33,765.65 29,603.96 Less: Accumulated Depreciation/Amortisation 17,906.82 16,141.24

Net Block 5 15,858.83 13,462.72 Capital Work-in-Progress at cost, including capital advances 2,907.05 1,324.70

18,765.88 14,787.42 INVESTMENTS 6 13,615.33 5,550.83 DEFERRED TAX ASSETS 1,015.80 1,322.80 (Refer Note No. 7 in Schedule 20)CURRENT ASSETS, LOANS AND ADVANCES Inventories 7 14,925.08 14,769.62 Sundry Debtors 8 11,599.09 10,186.51 Cash and Bank Balances 9 818.57 841.98 Other Current Assets 10 112.59 79.26 Loans and Advances 11 7,735.74 7,936.89

35,191.07 33,814.26

LESS: CURRENT LIABILITIES AND PROVISIONS Current Liabilities 12 19,633.66 14,168.56 Provisions 13 6,445.58 5,937.53

26,079.24 20,106.09

NET CURRENT ASSETS 9,111.83 13,708.17

MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) 14 712.51 72.75

TOTAL 43,221.35 35,441.97

Notes to the Accounts 20

Schedules referred to above form an integral part of the Balance Sheet and should be read in conjunction therewith.In terms of our Report of even date.




HOMI R. KHUSROKHAN

}Directors

B. D. BANERJEEE. A. KSHIRSAGARS. RAMANATHANPRAKASH R. RASTOGIBHARAT VASANIVENKATRAO S. SOHONIK. P. PRABHAKARAN NAIR




79

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. lacs

ScheduleNo.



INCOMETurnover (Gross) 91,067.68 74,318.11 Less: Excise Duty 7,398.81 6,858.63

Turnover (Net) (Refer Note No. 8 in Schedule 20) 83,668.87 67,459.48 Other Income 15 2,273.88 11,168.75

85,942.75 78,628.23

EXPENDITUREMaterials Consumed 16 45,084.72 34,700.52Purchase of Finished Goods 5,977.86 7,240.23(Increase)/Decrease in Closing Stock of Finished Goods and Work in Process

17 (343.98) (860.97)

Operating Expenses 18 21,862.25 20,467.85 Interest Charges 19 343.05 434.00 Depreciation/Amortisation (Refer Note No. 13 in Schedule 20) 2,294.93 2,007.04

75,218.83 63,988.67

PROFIT BEFORE TAXATION 10,723.92 14,639.56 Provision for Taxation— Current Tax (2,984.48) (2,044.11)— For prior years (reversed) (59.00) – — Deferred Tax-adjustments (net) (Refer Note No. 7 in Schedule 20) (307.00) 101.28 — Fringe Benefits Tax (171.50) (3,521.98) (166.24) (2,109.07)

PROFIT AFTER TAXATION 7,201.94 12,530.49 Profit and Loss Appropriation AccountBalance brought forward from Previous Year 14,977.57 6,714.61

22,179.51 19,245.10

APPROPRIATIONSTransfer to/(from): Proposed Preference Dividend 660.00 660.00 Distribution Tax on Proposed Preference Dividend 112.17 112.17 Proposed Equity Dividend 1,917.53 1,917.53 Distribution Tax on Proposed Equity Dividend 325.89 325.89 General Reserve 712.94 1,251.94 Balance carried to Balance Sheet 18,450.98 14,977.57

22,179.51 19,245.10

Basic and Diluted Earnings per share Rs. 53.65 98.11 Nominal value per share in Rs. 10.00 10.00 Notes to the Accounts 20

Schedules referred to above form an integral part of the Profit and Loss Account and should be read in conjunction therewith.In terms of our Report of even date.




HOMI R. KHUSROKHAN

}Directors





80

RALLIS


CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009Rs. lacs



A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit before Taxation 10,723.92 14,639.56

Adjustment for :

(Profit)/Loss on Foreign Exchange 7.92 (25.84)

Depreciation 2,294.93 2,007.04

Interest (Net) 307.29 385.98

Voluntary Retirement Compensation – Amortised 397.48 140.75

Income from Investments (254.32) (159.23)

Provision for Leave Encashment 89.20 78.32

Provision for Supplimental Payments (2.46) 63.38

Provision for Gratuity 355.54 151.46

Waiver of Loan under Sales Tax Deferral Scheme (95.62) –

(Profit)/Loss on Sale of Assets (net) (includes assets w/off )

168.59 (8,709.70)

Unrealised foreign exchange translation gain on borrowings 21.46 7.58

(Profit)/Loss on Sale of Investments (net) (3.30) 3,186.71 (117.13) (6,177.39)

Operating Profit before working capital changes 14,010.63 8,462.17

Adjustments for :

Trade and other Receivables (1,261.45) (1,212.79)

Inventories (155.47) (2,081.97)

Trade Payables 5,451.21 4,034.29 (7,066.83) (10,361.59)

CASH GENERATED FROM OPERATIONS 18,044.92 (1,899.42)

Direct Taxes paid (Net of refund received) (3,099.19) (2,593.76)

Voluntary Retirement Compensation (1,037.24) –

NET CASH FROM OPERATING ACTIVITIES (A) 13,908.49 (4,493.18)

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (6,557.51) (2,693.32)

Proceeds on Sale of Fixed Assets 115.53 9,019.71

Purchase of Investments (19,733.37) (12,274.11)

Proceeds on Sale of Investments 11,672.18 10,012.67

Deposits pledged with Banks and Government Authorities 17.78 (9.52)

Proceeds on Reduction of fixed deposits with maturity greater than 3 months – 0.03

Interest/Dividend received 256.75 178.09

NET CASH FROM/(USED IN) INVESTING ACTIVITIES (B) (14,228.64) 4,233.55

81

Rs. lacs



C. CASH FLOW FROM FINANCING ACTIVITIES :

Long Term Borrowing repaid (182.58) (230.55)

Long Term Borrowing taken 93.02 78.33

(Repayment) of /Proceeds from Short Term Borrowings (Net)

3,748.83 1,222.56

Interest paid (340.79) (430.70)

Dividend and taxes thereon paid (3,015.59) (1,893.88)

NET CASH FROM/(USED IN) FINANCING ACTIVITIES (C) 302.89 (1,254.24)

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS (A) + (B) + (C) (17.26) (1,513.87)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR


Balances with Scheduled Banks on Current Account 697.07 2,205.21

702.54 2,216.41

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR


Balances with Scheduled Banks on Current Account 650.46 697.07

685.28 702.54

Notes to the Accounts - see Schedule No. 20

Footnote :

Cash and cash equivalents as above: 685.28 702.54

Restricted Bank Balance 30.59 18.96

Balances with Scheduled Banks;

On Fixed Deposit Accounts (more than three months maturity)

9.22 31.03


CASH AND BANK BALANCES AS PER SCHEDULE 9 818.57 841.98

Schedules referred to above form an integral part of the Cash Flow Statement and should be read in conjunction therewith.In terms of our Report of even date.




HOMI R. KHUSROKHAN

}Directors





82

RALLIS


SCHEDULES 1 TO 20 FORMING PART OF THE CONSOLIDATED ACCOUNTSRs. lacs



SCHEDULE 1. CAPITAL :-

Authorised :


150,000,000 Cumulative Redeemable Preference Shares of Rs. 10/- each 15,000.00 15,000.00

20,000.00 20,000.00

Issued and Subscribed :


Add: Amount paid-up on forfeited shares 0.02 0.02

1,198.48 1,198.48

88,000,000 7.5% Cumulative Redeemable Preference Shares of Rs. 10/- each 8,800.00 8,800.00

9,998.48 9,998.48

Notes: (1) Of the above Equity Shares, 2,604,140 shares of Rs. 10/- each were allotted as fully paid-up pursuant to contracts without payment being received in cash and 1,144,700 shares of Rs. 10/- each were issued as fully paid up Bonus Shares by capitalisation from General Reserve.

(2) 88,000,000 7.5% Cumulative Redeemable Preference Shares of Rs. 10/- each, of an aggregate value of Rs. 880,000,000/- were allotted on a “Private Placement” basis on 3rd February, 2004 and are due for redemption on 3rd August, 2009.

SCHEDULE 2. RESERVES AND SURPLUS :-

Rs. lacs

As at31st March,

2008


2009

As at31st March,

2007


2008

Capital Reserve 1,680.93 — — 1,680.93 1,680.93 — — 1,680.93

Capital Subsidy 63.58 — — 63.58 63.58 — — 63.58

Investment Allowance Reserve 17.80 — — 17.80 17.80 — — 17.80

Foreign Currency Translation Reserve (31.89) 7.92 — (23.97) (6.05) (25.84) — (31.89)

Reserve under Sec.45IC of the RBI Act, 1934 10.39 — — 10.39 10.39 — — 10.39

General Reserve 4,062.76 712.94 — 4,775.70 2,737.69 1,325.07 — 4,062.76

5,803.57 720.86 — 6,524.43 4,504.34 1,299.23 — 5,803.57

Profit & Loss Account 14,977.57 7,201.94 3,728.53 18,450.98 6,714.61 12,530.49 4,267.53 14,977.57

20,781.14 7,922.80 3,728.53 24,975.41 11,218.95 13,829.72 4,267.53 20,781.14

83

Rs. lacsAs at

31st March, 2009

As at31st March,

2008SCHEDULE 3. SECURED LOANS :-(Refer Note Nos. 5 & 6 in Schedule 20)

Loans from Banks : Bank overdrafts and temporary loans 2,454.59 3,603.58 Loans from entities other than Banks and Financial Institutions 26.50 131.73

2,481.09 3,735.31

SCHEDULE 4. UNSECURED LOANS :-Short Term Loans From Banks 5,192.38 273.12 Other Loans and Advances 169.46 188.29 Loan under Sales Tax Deferral Scheme 404.53 465.63

5,766.37 927.04

Schedule 5. FIXED ASSETS (Refer Note Nos 4, 6 & 13 in Schedule No.20)

Rs. lacs

Gross Block (at cost) Depreciation/Amortisation Net Block

As at 31st March,

2008

Additions Deductions As at 31st March,

2009

As at 31st March,

2008

For the year

Deductions during the

year

As at 31st March,

2009

As at 31st March,

2009

As at 31st March,

2008Intangible Assets

Software 764.57 183.66 – 948.23 592.46 153.02 – 745.48 202.75 172.11 Goodwill 163.63 – – 163.63 163.63 – 163.63 – – Registration Expenses – 493.25 – 493.25 – 123.31 – 123.31 369.94 – Total Intangible Assets 928.20 676.91 – 1,605.11 756.09 276.33 – 1,032.42 572.69 172.11 Tangible Assets

Freehold Land 255.16 1,705.54 – 1,960.70 – – – – 1,960.70 255.16 Leasehold Land 597.33 – 1.08 596.25 74.94 5.97 0.16 80.75 515.50 522.39 Buildings (see footnote 1 and 2) 6,358.34 348.53 329.84 6,377.03 2,331.17 180.31 173.08 2,338.40 4,038.63 4,027.17 Plant and Machinery 19,667.67 2,111.72 386.77 21,392.62 12,413.05 1,656.00 309.97 13,759.08 7,633.54 7,254.62 Furniture, Fixtures and Office Equipments 739.32 32.85 20.31 751.86 320.00 72.52 7.92 384.60 367.26 419.32 Vehicles (see footnote 3) 1,057.94 99.61 75.47 1,082.08 245.99 103.80 38.22 311.57 770.51 811.95 Total Tangible Assets 28,675.76 4,298.25 813.47 32,160.54 15,385.15 2,018.60 529.35 16,874.40 15,286.14 13,290.61

Total 29,603.96 4,975.16 813.47 33,765.65 16,141.24 2,294.93 529.35 17,906.82 15,858.83 13,462.72 Previous Year 28,501.44 1,845.17 742.65 29,603.96 14,566.84 2,007.04 432.64 16,141.24 13,462.72 Footnotes :

1. Cost of buildings include cost of 50 shares (Previous Year 50 shares) of Rs. 50/- each fully paid and cost of 5 shares (Previous Year 5 Shares) of Rs. 100/- each fully paid in respect of ownership flats in 7 (Previous Year 7) Co-operative Societies.

2. Buildings include an asset having a gross block of Rs. 181.63 lacs (Previous Year Rs. 181.63 lacs) and net block of Rs. 133.02 lacs (Previous Year Rs. 135.98 lacs) being cost of share in Co-operative Housing Society.

3. Vehicles include assets taken under hire purchase agreements costing Rs. 707.46 lacs (Previous Year Rs.741.15 lacs) and having written down value aggregating 476.26 lacs. (Previous Year Rs. 568.44 lacs).

84

RALLIS


Rs. lacs

No ofShares

NominalValue

As at31st March,

2009

As at31st March,

2008

SCHEDULE 6. INVESTMENTS :-

LONG TERM

(at cost less provision for diminution in value)

(I) Trade Investments

(Unquoted-Fully paid):

Aich Aar Chemicals Pvt. Ltd. – Equity Shares 124,002 10 9.31 9.31

Biotech Consortium India Ltd. - Equity Shares 50,000 10 5.00 5.00

Indian Potash Ltd. - Equity Shares 54,000 10 0.90 0.90

6.50% Bengal Chamber of Commerce & Industry – Debentures (Re. 1) 6 1,000 – –

Bharuch Enviro Infrastructure Ltd. – Equity Shares 36,750 10 3.68 3.68

Bharuch Eco-Acqua Infrastructure Ltd. – Equity Shares 181,814 10 18.17 18.17

Sipcot Industries Common Utilities Ltd. – Equity Shares (Re. 1) 113 100 – –

Patancheru Enviro-Tech Ltd. – Equity Shares 10,822 10 1.08 1.08

Advinus Therapeutics Pvt. Ltd. – Equity Shares 18,286,000 10 1,828.60 1,828.60

4.25 % Advinus Therapeutics Pvt. Ltd. – Non Convertible Debentures (Refer Note No. 11 in Schedule 20) 88,000 1,000 880.00 880.00

A 2,746.74 2,746.74

(Unquoted-Partly paid):

(Refer Note No. 2 (c) in Schedule 20)

Bharuch Eco-Acqua Infrastructure Ltd. - Equity Shares (Rs. 6.34 paid up) 118,550 10 7.52 7.52

B 7.52 7.52

C=A+B 2,754.26 2,754.26

85

Rs. lacs

No ofShares

NominalValue

As at31st March,

2009

As at31st March,

2008

SCHEDULE 6. INVESTMENTS :- (Contd.)

(II) Non-Trade Investments (Quoted-Fully paid): (see footnote 1) Spartek Ceramics India Ltd. – Equity Shares (Re. 1) 7,226 10 – – Nagarjuna Finance Ltd. – Equity Shares (Re. 1) 400 10 – – Pharmaceuticals Products of India Limited – Equity Shares (Re. 1)

10,000 10 – –

14% Spartek Ceramics India Limited-Debentures – Redeemable Partly Convertible (Re. 1)

560 60 – –

Ispat Alloys Ltd. – Equity Shares (Re. 1) 504 10 – – J.K.Cement Ltd. – Equity Shares (Re. 1) 44 10 – – Uniscans & Sonics Ltd. – Equity Shares (Re. 1) 96 10 – –

D – –

(Unquoted-Fully paid): Amba Trading Company Limited – Equity Shares 130,000 10 53.32 53.32 Associated Inds. (Assam) Ltd. – Equity Shares (Re. 1) 30,000 10 – – Caps Rallis (Private) Ltd. (Nominal value of Zim. $ 2 each) – Equity Shares 2,100,000 146.30 146.30

E 199.62 199.62

F = D + E 199.62 199.62

TOTAL LONG TERM INVESTMENTS G = C + F 2,953.88 2,953.88

CURRENT INVESTMENTS(Lower of the cost and fair value)Units of Mutual Funds (see footnote 2) Tata Floater Fund - Daily Dividend 42,944,151 10 4,309.70 – ICICI Prudential Flexi Income Plan Premium - Daily Dividend 40,281,243 10 4,259.15 – Tata Liquid Super High Investment Fund - Daily Dividend 206,504 1,000 2,301.52 – Tata Floating Rate Fund Long Term - Income/Bonus 27,745,675 10 – 2,805.87

TOTAL CURRENT INVESTMENTS H 10,870.37 2,805.87

TOTAL I = G + H 13,824.25 5,759.75

Less: Provision for diminution in value 208.92 208.92

GRAND TOTAL 13,615.33 5,550.83

Aggregate Book Value of Investments :Unquoted - At cost less Provision for diminution in value 13,615.33 5,550.83 Quoted - At cost less Provision for diminution in value – –

13,615.33 5,550.83

Footnotes:1. Market value of quoted investments Rs. 0.08 lacs (Previous Year Rs. 0.70 lacs).2. Net assets value of units of mutual funds Rs. 10,870.37 lacs (Previous Year Rs. 2,811.14 lacs).

86

RALLIS


Rs. lacs



SCHEDULE 7. INVENTORIES :-

(Valued at lower of the cost and net realisable value)

Stores and Spare Parts 92.19 115.35

Stock-in-trade:

Raw Materials 5,237.19 5,438.68

Packing Material 635.40 599.27

Work-in-Progress 824.65 750.20

Finished Goods 8,135.65 14,832.89 7,866.12 14,654.27

14,925.08 14,769.62

SCHEDULE 8. SUNDRY DEBTORS :-

(Considered good, unless otherwise stated)

(Refer Note Nos. 2 (b) & 2 (e) in Schedule 20)

Gross Debtors 14,895.89 15,553.17

Less: Provision for doubtful debts 3,296.80 5,366.66

11,599.09 10,186.51

SCHEDULE 9. CASH AND BANK BALANCES :-

Cash and Cheques in Hand (Including Cheques in Hand of Rs. 29.76 lacs; Previous Year Rs. nil)

34.82 5.47

Balances with Scheduled Banks:

On Current Accounts 681.05 716.03

On Fixed Deposit Accounts 9.22 31.03


818.57 841.98

SCHEDULE 10. OTHER CURRENT ASSETS :-

Interest Accrued on Investments 112.59 79.26

112.59 79.26

87

Rs. lacsAs at

31st March, 2009As at

31st March, 2008SCHEDULE 11. LOANS AND ADVANCES :-(Unsecured, considered good unless otherwise stated)Advances recoverable in cash or in kind or for value to be received 2,972.71 3,010.36 Advances/Deposits considered doubtful of recovery 4,327.96 4,134.15 Less: Provision for doubtful advances/deposits 4,327.96 – 4,134.15 –

Balances with Customs, Port Trust and Central Excise 1,868.66 1,982.14 Advance Income Tax (net of provision) 2,891.12 2,936.89 Advance Fringe Benefit Tax (net of provision) 3.25 7.50

7,735.74 7,936.89

SCHEDULE 12. CURRENT LIABILITIES :-Acceptances – 397.27 Sundry Creditors Dues to Micro, Small and Medium Enterprises (Including interest Rs. 26.96 lacs; Previous Year Rs. 25.22 lacs) 127.85 557.60 Other Creditors 16,422.42 10,065.35 Liability towards Investor Education and Protection Fund: Unpaid Dividends 27.00 15.37 Unpaid Interest on Debentures 1.69 1.69 Unpaid Fixed Deposits 0.87 0.87 Unpaid Interest on Fixed Deposits 1.03 1.03

30.59 18.96 Customers’ Security Deposits, Credit Balances and Advance against supplies and services to be rendered

2,498.15 2,043.55

Interest accrued but not due on loans 20.10 17.85 Other Liabilities 534.55 1,067.98

19,633.66 14,168.56

SCHEDULE 13. PROVISIONS :-Proposed Equity Dividend 1,917.53 1,917.53 Distribution Tax on Proposed Equity Dividend 325.89 325.89 Proposed Preference Dividend 660.00 660.00 Distribution Tax on Proposed Preference Dividend 112.17 112.17 Provision for Fringe Benefit Tax (Net of advance tax) 13.97 13.97 Provision for Income Tax (Net of advance tax) 736.66 670.88 Provision for Gratuity 632.82 277.28 Provision for Leave Encashment 476.07 386.87 Provision for Pension under Voluntary Retirement Schemes 3.30 3.30 Provision for Supplemental Payments on Retirement 1,567.17 1,569.64

6,445.58 5,937.53

SCHEDULE 14. MISCELLANEOUS EXPENDITURE :-(to the extent not written off or adjusted)Voluntary Retirement Compensation 712.51 72.75

712.51 72.75

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Rs. lacs



SCHEDULE 15. OTHER INCOME :-

From Operations

Excise and Duty Drawback Claims 651.11 586.84

Scrap and Sundry Sales 516.36 640.39


Cash Discount 148.29 253.72

Sundry Income 525.94 1,946.71 513.20 2,108.58

Others

Profit/(Loss) on Sale of Investments (net) 3.30 117.13

Profit/(Loss) on Sale of Fixed Assets (net) – 8,709.70

Rent 33.79 26.09

Interest Income :

Trade Accounts 0.88 –

Interest on term and fixed deposits 34.88 35.76 48.02 48.02

Income from Investments :

Dividend from Trade Investments Long Term 1.96 1.92

Dividend from Other Current Investments 181.64 59.52

Interest from Trade Investments - Long Term 70.72 254.32 97.79 159.23

2,273.88 11,168.75

SCHEDULE 16. MATERIALS CONSUMED :-

Raw Materials Consumed

Opening Stock 5,438.68 4,316.30

Add: Purchases 42,039.09 33,053.81

Less: Closing Stock 5,237.19 42,240.58 5,438.68 31,931.43

Packing Materials Consumed 2,844.14 2,769.09

45,084.72 34,700.52

SCHEDULE 17. (INCREASE)/DECREASE IN CLOSING

STOCKS OF FINISHED GOODS AND WORK-IN-PROGRESS :-

Opening Stock

Finished Goods 7,866.12 7,349.88

Work in Process 750.20 8,616.32 405.47 7,755.35

Closing Stock

Finished Goods 8,135.65 7,866.12

Work in Process 824.65 8,960.30 750.20 8,616.32

(343.98) (860.97)

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SCHEDULE 18. OPERATING EXPENSES :-(Refer Note No. 6 & 12 in Schedule 20)

Personnel Cost :

Salaries, Wages, Commission, Bonus etc. 5,467.65 4,698.64

Gratuity 486.60 386.61

Voluntary Retirement Compensation Amortised 397.48 140.75

Staff Provident and Superannuation Funds 382.31 344.10

Staff Welfare 584.14 7,318.18 601.98 6,172.08

Freight, Handling and Packing 1,918.35 1,961.42

Processing 565.95 562.41

Changes in Excise Duty on Inventory of Finished Goods (107.84) (12.04)

Traveling 515.90 545.37

Power and Fuel 1,960.10 2,123.51

Brand Equity Contribution 111.97 93.08

Repairs :

Repairs to Machinery 289.95 287.31

Repairs to Buildings 61.03 75.89

Other Repairs 289.38 640.36 285.07 648.27

Stores and Spares Consumed 354.07 362.45

Rates and Taxes 196.27 295.53

Bad Debts 2,003.51 1,153.74

Cash Discount 1,412.80 1,929.69


Insurance 110.06 118.43

Rent 633.34 820.54

Bank Charges 531.11 362.25

Directors’ Fees & Commission 96.80 84.95

Provision for Doubtful Debts/Advances for the year 198.34 205.03

Less : Provision Written Back against doubtful debts 2,003.51 (1,805.17) 1,153.74 (948.71)

Selling Expenses 1,129.28 878.69

Legal and Professional Expenses 589.09 730.02

Loss on Sale of Fixed Assets (net) 168.59 –

Other Expenses 3,178.22 2,374.32

21,862.25 20,467.85

SCHEDULE 19. INTEREST CHARGE :-Loans for Fixed Term 5.37 26.29 Other Interest 337.68 407.71

343.05 434.00

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SCHEDULE 20: - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR 2008-09

1. Significant Accounting Policies: -

(a) Principles of Consolidation:

The Consolidated Financial Statements relate to Rallis India Limited (“the Company”) and its subsidiary. The Company and its subsidiary constitute the “Group”. The consolidated financial statements have been prepared on the following basis:

— The financial statements of the Company and its subsidiary have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses as per Accounting Standard (AS) 21 “Consolidated Financial Statements” referred to in section 211 (3C) of the Companies Act 1956.

— The foreign subsidiary’s revenue items are consolidated at the average foreign currency exchange rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Exchange gains / (losses) arising on conversion are recognised under Foreign Currency Translation Reserve.

— As the cost of investment in the subsidiary to the Company is equal to the paid up capital of the subsidiary, no goodwill or capital reserve has arisen.

— As the subsidiary is wholly owned by the Company, no share of minority interest in the net assets and in the net profits of the subsidiary has been recognised.

Details of the subsidiary whose assets, liabilities, income and expenses are included in the consolidation and the Company’s holdings therein are as under:

Entity Incorporated in Proportion of Groups interest (%)

Date of acquisition of control

Rallis Australasia Pty Ltd. Australia 100% May 4, 2006

(b) Basis of Accounting

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards referred to in section 211(3C) of the Companies Act,1956. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(c) Use of Estimates

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management’s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(d) Fixed Assets and Depreciation / Amortisation

(i) Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Group are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalised up to the date when the asset is ready for its intended use.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase. Extra shift depreciation

91

is applied to applicable items of plant and machinery for days additional shifts are worked. Freehold land is not depreciated since it is deemed to have an indefinite economic life. The premium paid for acquiring leasehold land is amortised over the period of lease on a straight line basis.

(ii) Intangible assets and amortisation

Intangible assets other than goodwill are valued at cost less amortisation. These generally comprise of costs incurred to acquire computer software licences and implement the software for internal use (including software coding, installation, testing and certain data conversion).

Research costs are charged to earnings as they arise.

Costs incurred for applying research results or other knowledge to develop new products, are capitalised to the extent that these products are expected to generate future financial benefits. Other development costs are expensed as and when they arise.

Goodwill comprises the portion of a purchase price for an acquisition that exceeds the market value of the identifiable assets, with deductions for liabilities, calculated on the date of acquisition, on the share in the acquired company’s assets acquired by the Company.

Intangible assets are reported at acquisition value with deductions for accumulated amortisation and any impairment losses.

Amortisation takes place on a straight line basis over the asset’s anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible asset is expected to be used and generally does not exceed 10 years.

An impairment test of intangible assets is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is reported in the Profit and Loss Account.

(e) Impairment of assets

The carrying values of assets of the Group’s cash-generating units are reviewed for impairment annually or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

(f) Investments

Long term investments are valued at cost, less provision for diminution other than temporary, in value, if any. Current investments are valued at the lower of cost and fair value.

(g) Inventory

Inventories are valued at the lower of the cost and the net realisable value.

In the case of raw materials, packing materials, stores and spare parts and traded finished goods, cost are determined in accordance with the continuous moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs.

Cost of finished goods and work-in-progress are determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(h) Revenue Recognition

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Income recognition for services takes place as and when the services are performed.

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(i) Financial Income and Borrowing Cost

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(j) Foreign Currency Transactions

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Profit and Loss Account.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are valued at year end rates, and unrealised translation differences are included in the Profit and Loss Account.

Investments in foreign currency (non monetary items) are reported using the exchange rate at the date of the transaction.

The Group’s forward exchange contracts are not held for trading or speculation. The premium/discount arising on entering into such contract is amortised over the life of such contracts and exchange differences arising on such contracts are recognised in the Profit and Loss Account.

(k) Employee Benefits

(i) Short Term

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long Term

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

• Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fund, family pension fund and superannuation fund. The Group’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

• Defined-benefit plans

Expenses for defined-benefit gratuity and supplemental payment plans are calculated as at the balance sheet date by independent actuaries in a manner that distributes expenses over the employee’s working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees.

(iii) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

93

(l) Deferred Revenue Expenditure

Expenditure incurred on voluntary retirement schemes is being amortised on a straight line basis over the estimated period of payback which does not exceed five years. The period of deferral does not extend beyond 31st March, 2010.

(m) Taxes on Income

The Group’s income taxes include taxes on the Group’s taxable profits, fringe benefits tax, adjustment attributable to earlier periods and changes in deferred taxes. Valuation of all tax liabilities / receivables is conducted at nominal amounts and in accordance with enacted tax regulations and tax rates or in the case of deferred taxes, those that have been substantially enacted.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Group carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

(n) Lease Accounting

(i) Operating Leases

Lease of an asset whereby the lessor essentially remains the owner of the asset is classified as operating lease. The payments made by the Group as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.

(ii) Finance Leases

Assets taken on finance lease after 1st April, 2001, are capitalised at fair value or net present value of the minimum lease payments, whichever is lower.

Depreciation on the assets taken on lease is charged at the rate applicable to similar type of fixed assets as per the Group’s accounting policy on depreciation as stated above. If the leased assets are returnable to the lessor on the expiry of the lease period, depreciation is charged in accordance with the Group’s depreciation policy as stated above or in a straight line basis over the lease period, which ever is shorter.

Lease payments made are apportioned between the finance charges and reduction of the outstanding liability in respect of assets taken on lease.

(o) Segment Reporting

The accounting policies adopted for segment reporting are in line with the accounting policy of the Group. Segment Revenue, Segment Expenses, Segment Assets and Segment Liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Group as a whole and are not allocable to segments on reasonable basis, have been included under “Unallocated Revenue / Expenses / Assets / Liabilities”.

(p) Provisions and Contingencies

A provision is recognised when the Group has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

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(q) Cash Flow Statements

Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting Standard on Cash Flow Statements (AS-3) as prescribed under section 211(3C) of the Indian Companies Act 1956.

(r) Cash and Cash Equivalents

Cash and bank balances and current investments that have insignificant risk of change in value, which have durations up to three months, are included in the Group’s cash and cash equivalents in the Cash Flow Statement.

(s) Earnings per Share

Basic Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Group by the weighted average number of equity shares in issue during the year.

2. Contingent Liabilities: -

Rs. lacs

As at As at

31st March 31st March

2009 2008

(a) Demand contested by the Group

— Sales tax 1,651.18 1,637.50

— Excise duty 378.77 1,211.86

— Customs Duty 144.10 144.10

— Income Tax 1,455.55 1315.94

— Service tax 1.85 1.85

— Property cases 63.56 63.56

— Labour cases 197.86 184.39

— Other Cases 536.87 535.73

— Number of cases where amount is not quantifiable 26 Nos; (Previous Year 28 Nos)

(b) Bills discounted 987.36 2,092.84

(c) Uncalled partly paid shares held as Investments 4.34 4.34

(d) Other guarantees given to Government authorities for which the Group is contingently liable to Rs. 85.80 lacs (Previous Year Rs.132.16 lacs).

(e) Recourse guarantee amounting to Rs. NIL (Previous Year Rs. 453.00 lacs) has been given by the Group in respect of channel finance provided to its dealers by banks.

The Group does not expect any liability in respect of item (a), (b), (d) and (e) to devolve in respect of its exposure and therefore no provision has been made in respect thereof.

3. Estimated amount of contracts remaining to be executed on capital account is Rs. 1,703.28 lacs (Previous Year Rs. 1,852.54 lacs) including advances paid aggregating Rs. 1,083.94 lacs (Previous Year Rs. 238.57lacs).

4. Fixed assets include Rs. 769.52 lacs (Previous Year Rs. 821.81 lacs) representing the book value of assets held for disposal. The Management expects to recover amounts higher than the carrying value of these assets.

5. Secured Loans :-

(a) Bank overdrafts and temporary loans have been secured by a first charge by way of hypothecation of stocks and receivables.

(b) Loans from others on account of purchase of vehicles have been secured by way of hypothecation of vehicles.

95

6. The Group has held certain equipments under a non-cancellable operating lease. The Group’s future lease rentals under the operating lease arrangements as at the year end are as under:

Rs. lacs

31.03.2009 31.03.2008

Future Lease Rentals

Within 1 year – 232.24

Over 1 year but less than 5 years – –

More than 5 years – –

Amount charged to Profit and Loss Account (as part of rent) 234.47 309.65

The lease terms do not contain any exceptional / restrictive covenants nor are there any options given to Group to renew the lease or purchase the equipments. The agreements provide for changes in the rentals if taxes are leviable on such rentals change. With effect from 15.04.08 Sales Tax rates increased to 5 % from 4%.

Premises are taken by the Group on operating leases that are cancellable.

The Group has acquired certain vehicles under hire purchase arrangements. These arrangements are non-cancellable.

The fair value of such assets aggregates Rs. 476.26 lacs (Previous Year Rs. 568.44 lacs). The total minimum lease payments (MLP) in respect thereof and present value of future lease payments, discounted at the interest rates implicit in the lease are as follows:

Rs. lacs

Due 31.03.2009 31.03.2008

MLP MLP

Principal Interest Total Principal Interest Total

Within 1 Year 26.17 0.79 26.96 100.25 6.78 107.03

Over 1 year but less than 5 years 0.33 0.01 0.34 31.48 0.79 32.25

The legal title in the said vehicles remains with the Group. The hire purchase arrangements provides for revision of hire purchase instalments in the event of changes in taxes, if any, leviable on hire purchase instalments.

The terms of hire purchases do not contain any exceptional / restrictive covenants.

7. Deferred tax assets and liabilities:-

The components of deferred tax assets and liabilities are as underRs. lacs

Components As at 31st March,

2009 2008

Deferred Tax Assets

On Provision against debts and advances 2,592.49 3,229.32

On other items 210.62 131.50

Total 2,803.11 3,360.82

Deferred Tax Liabilities

On fiscal allowance on fixed assets 1,787.31 2,038.02

Total 1,787.31 2,038.02

Net Deferred tax Asset Recognised 1,015.80 1,322.80

The sum of Rs. 307.00 lacs (Previous Year Rs.101.28 lacs was credited) has been debited to the Profit and Loss Account.

8. Segment Reporting

The Group has determined its business segment as “Agri Inputs” comprising of Pesticides, Plant Growth Nutrients and Seeds. The other business segment comprises “Fine Chemicals” and is non reportable.

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a. Primary Segment Information

Rs. lacs

Particulars

Business Segments Consolidated TotalAgri-Inputs Others

(non - reportable)

REVENUETotal External Revenue 85,045.71 603.66 85,649.37

77,481.23 822.62 78,303.85Total Inter-Segment Revenue – – –Segment Revenue 85,045.71 603.66 85,649.37

77,481.23 822.62 78303.85Unallocable Revenue 293.38

324.38Total Revenue (A) 85,942.75

78,628.23

RESULTSSegment Results (B) 10,904.97 (9.86) 10,895.11

14,872.12 44.48 14,916.60Un-allocable Income 171.86(Net of un-allocable expenses) 156.96Operating Profit/(Loss) 11,066.97

15,073.56Interest Expenses 343.05

434.00Profit/(Loss) before taxation 10,723.92

14,639.56Taxation (3,521.98)

(2,109.07)Profit/(Loss) after taxation 7,201.94

12,530.49

OTHER INFORMATION

ASSETSSegment Assets (C) 50,377.58 572.06 50,949.64

44,906.96 671.07 45,578.03Unallocated assets 18,350.95

9,970.38Total Assets 69,300.59

55,548.06

LIABILITIESSegment Liabilities (D) 20,674.94 67.62 20,742.56

14,748.59 84.13 14832.72Unallocated Liabilities 13,584.15

9,935.72Total Segmental Liability 34,326.71

24,768.44

97

Particulars

Business Segments Consolidated TotalAgri-Inputs Others

(non - reportable)

CAPITAL EXPENDITURETotal Cost incurred during the Year to acquire SegmentAssets (E) 6,557.51 – 6,557.51

2,693.32 – 2,693.32Unallocated Capital Expenditure –

–Total Cost incurred during the Year to acquire assets 6,557.51

2,693.32DEPRECIATIONSegment Depreciation (F) 2,265.95 28.98 2,294.93

1,972.12 34.92 2,007.04Unallocated Depreciation –

–Total Depreciation 2,294.93

2,007.04NON CASH EXPENSESSegment Non Cash expensesother than Depreciation/Amortisation (G) 397.48 – 397.48

140.75 – 140.75Unallocable Non Cash expenses –

–Total Non Cash expenses 397.48

140.75


b. Secondary Segment InformationRs. lacs

2008-09 2007-081. Segment Revenue (a) India 55,779.41 61,559.00

(b) Outside India 29,869.96 16,744.85 Total 85,649.37 78,303.852. Segment Assets (excluding Deferred Tax Assets) (a) India 42,507.64 41,216.90 (b) Outside India 8,442.00 4,361.13 Total 50,949.64 45,578.03


All the tangible and intangible fixed assets of the Group are situated in India and therefore cost incurred during the year for acquisition of such assets under different geographic segments is not furnished.

Footnotes: (i) Unallocable assets include Deferred Tax Assets, Investments, Advance Income Tax, Advance Fringe Benefits Tax,

Interest Accrued on Investments and Miscellaneous Expenditure to the extent not written off. (ii) Unallocable liabilities includes Secured Loans, Unsecured Loans, Provisions for Equity Dividend and tax thereon,

Provisions for Preference Dividend and tax thereon, Provision for Supplemental Payments on Retirement, Provision for Income and Fringe Benefit Tax.

(iii) Unallocable income includes income from investment activities. (iv) Unallocable expenditure includes charge in respect of Supplemental Payments on retirement.

Rs. lacs

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9. Related Party Disclosures:

Disclosure as required by Accounting Standard (AS) - 18 “Related Party Disclosures” as prescribed under section 211 (3C) of the Companies Act,1956.

(a) Names of the related parties and description of relationship:

(i) Promoters: Tata Tea Limited

Tata Sons Limited

Tata Chemicals Limited

Tata Investment Corporation Limited

Ewart Investments Limited

(ii) Key Management Personnel: Mr. V. Shankar – Managing Director

(b) Details of Transactions:

Rs. lacs

Nature of Transactions PromotersKey

Management Personnel

Total

Purchase of Goods 287.93 – 287.93

156.68 – 156.68

Sales of Goods 583.48 – 583.48

935.47 – 935.47

Services Received 27.19 – 27.19

37.20 – 37.20

Other Expenses 2.70 – 2.70

90.68 – 90.68

Dividend Paid (Equity) 866.78 – 866.78

435.79 – 435.79

Dividend Paid (Preference) 277.50 – 277.50

277.50 – 277.50

Debit Balance outstanding as on 31.03.2009 27.89 – 27.89

— Other Receivables 55.61 – 55.61

Credit Balance outstanding as on 31.03.2009 19.27 – 19.27

— Other Payables 5.80 – 5.80

Remuneration Paid PromotersKey

Management Personnel

Total

Dr. V. S. Sohoni –

–

–

79.84

–

79.84

Mr. V. Shankar –

–

95.97

52.36

95.97

52.36


99

Transactions included in (b) above which are in excess of 10% of the total related party transactions of the same type are given below:

Rs. lacs

Nature of Transactions Tata Chemicals

Ltd

Tata Tea Ltd. Tata Sons Ltd

Purchase of Goods 287.93 – –

156.68 – –

Services Received – – 27.19

– – 37.20

Other Expenses – – 2.70

– – 90.68

Sales of Goods 583.48 – –

935.47 – –

Dividend Paid(Equity) 180.24 470.20 144.12

90.12 235.10 72.06

Dividend Paid (Preference) 187.50 90.00 –

187.50 90.00 –


10. Earnings per Share:- Rs. lacs

2008-09 2007-08

(i) Net Profit After Tax 7,201.94 12,530.49

(ii) Less : Preference dividend including tax thereon 772.17 772.17

(iii) Profit attributable to Equity Shareholders 6,429.76 11,758.32

(iv) Weighted average No. of Equity Share for Basic/Diluted EPS (Nos) 11,984,593 11,984,593

(v) Nominal Value of Equity Per Share 10 10

Basic/Diluted Earning Per Share (in Rs.) 53.65 98.11

11. The Group has invested Rs. 880.00 lacs in Non - Convertible Debentures of Advinus Therapeutics Pvt. Ltd., having a coupon rate of 4.25% and will be redeemed in three equal instalments in the years 2011, 2012 and 2013 at a premium of 25%. Income recognised during the year includes Rs. 33.32 Lacs (Previous Year Rs. 33.32 lacs) in respect of redemption premium determined on the basis of the Internal Rate of Return.

12. Employee Benefit Obligations:-

Defined-Contribution Plans

The Group makes contribution towards provident fund, family pension fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund is administered by the Trustees of Rallis India Limited Provident Fund Trust, the family pension fund is administered by the Government of India and the superannuation fund is administered by the Life Insurance Corporation of India. Under the schemes, the Group is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefit. The Rules of the Group’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared by the Employees’ Provident Fund by the Government under para 60 of the Employees’ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Group. Having regard to the assets of the Fund and the return on the investments, the Group does not expect any deficiency in the foreseeable future.

A sum of Rs. 382.31 lacs (Previous Year Rs. 344.10 lacs) has been charged to the revenue account in this respect.

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Defined–Benefits Plans

The Group offers its employees defined-benefit plans in the form of a gratuity scheme (a lump sum amount) and a supplemental pay scheme (a life long pension). Benefits under the defined benefit plans are typically based either on years of service and the employee’s compensation (generally immediately before retirement). The gratuity scheme covers substantially all regular employees, while supplemental pay plan covers certain executives. In the case of the gratuity scheme, the Group contributes funds to Gratuity Trust, which is irrevocable, while the supplemental pay scheme is not funded. Commitments are actuarially determined at year-end. On adoption of the revised Accounting Standard, (AS) - 15 on “Employee Benefits” prescribed under section 211 (3C) of the Indian Companies Act 1956, actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the profit and loss account.

The net value of the defined-benefit commitment is detailed above: Rs. lacs

Gratuity

(Funded Plan)

Supplemental Pay (Unfunded

Plan)

Total Gratuity

(Funded Plan)


Plan)

Total

2008-09 2007-08

Present Value of Commitments 1,238.59 1,567.17 2,805.76 1,138.26 1,569.63 2,707.89

Fair Value of Plans 605.77 – 605.77 860.98 – 860.98

Net liability in the balance sheet 632.82 1,567.17 2,199.99 277.28 1,569.63 1,846.91

Defined benefit commitments: Rs. lacs

Gratuity

(Funded Plan)


Plan)

Total Gratuity

(Funded Plan)


Plan)

Total

2008-09 2007-08

Opening balance as at 1st April, 2008

1,138.26 1,569.63 2,707.89 806.41 1,506.25 2,312.66

Benefits earned during the year – – – – – –

Current Service Cost 66.84 14.14 80.98 75.76 16.32 92.08

Interest expenses 87.19 129.62 216.81 63.86 123.76 187.62

Paid benefits (302.73) (117.63) (420.36) (112.02) (100.53) (212.55)

Actuarial (gain)/loss 249.03 (28.59) 220.44 304.25 23.83 328.08

Closing balance as at 31st March, 2009 1,238.59 1,567.17 2,805.76 1,138.26 1,569.63 2,707.89

Plan assets: Gratuity Rs. lacs

2008-09 2007-08

Opening balance as at 1st April 860.98 558.15

Expected return on scheme assets 62.54 59.36

Contributions by the Group 131.06 222.15

Paid funds (302.72) (102.71)

Actuarial gain / (loss) (146.09) (2.09)

Balance with the Trust as at 31st March 605.77 734.86

Funds lying with the Trust as at 31st March – 126.12

Closing balance as at 31st March 605.77 860.98

101

Return on plan assets: Gratuity Rs. lacs

2008-09 2007-08

Expected return on plan assets 62.54 59.36

Actuarial gain / (loss) (146.07) (2.09)

Actual return on plan assets (83.54) –

Expenses on defined benefit plan: Rs. lacs

Gratuity

(Funded Plan)


Plan)

Total Gratuity

(Funded Plan)


Plan)

Total

2008-09 2007-08

Current service costs 66.84 14.14 80.98 75.76 16.32 92.08

Past service cost – – – – – –

Interest expense 87.19 129.62 216.81 63.86 123.76 187.62

Expected return on investment (62.54) – (62.54) (59.36) – (59.36)

Net actuarial (gain) / loss 395.11 (28.59) 366.52 306.35 23.83 330.18

Expenses charged to the profit and loss account 486.60 115.17 601.77 386.61 163.91 550.52

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment’s size, funding requirements and pension expense.

2008-09 2007-08

Rate for discounting liabilities 8.00% p.a. 8.50% p.a.

Expected salary increase rate 6.00% p.a. 6.00% p.a.

Expected pension increase rate 6.00% p.a. 6.00% p.a.

Expected return on scheme assets 8.00% p.a. 8.00% p.a.

Mortality rates LIC 1994-96 ultimate table LIC 1994-96 ultimate table

Experience adjustment:

(a) Gratuity: Rs. lacs

2008-09 2007-08 2006-07

Defined benefit obligations 1,238.59 1,138.26 806.41

Plan asset 605.77 860.98 558.15

Experience adjustment on plan assets (146.08) * *

Experience adjustment on plan liabilities 25.81 * *

(a) Supplemented Pay: Rs. lacs

2008-09 2007-08 2006-07

Defined benefit obligations 1,567.17 1,569.63 1,506.25

Plan asset – – –

Experience adjustment on plan assets – – –

Experience adjustment on plan liabilities (79.49) * *

The Group adopted AS15 w.e.f. 1st April, 2006. * The figures in respect of previous periods are not available.

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The estimates of future salary increases, considered in the actuarial valuation, taken into account of inflation, security, promotion and other relevant factors such as supply and demand in the employment market.

The contributions expected to be made by the Group during the financial year 2009-10 amounts to Rs. 57.98 lacs.

The plan assets are managed by the Gratuity Trust formed by the Group. The management of funds is entrusted with the Life Insurance Corporation of India and HDFC Standard Life Insurance Group Limited. The details of investments made by them are not available.

13. Accelerated Depreciation

During the year, on the basis of estimates of the Group’s technical staff, the Group has accelerated its depreciation charge on certain facilities which were used for manufacture of products which are currently discontinued. These assets have been brought down to the terminal value and the rates applied are numerous and cannot be meaningfully listed in the financial statements. As a result the depreciation charge for the year is higher by Rs. 598.49 lacs and the profit for the year, after adjusting the reduction in deferred tax liability of Rs. 203.43 lacs, lower by Rs. 395.06 lacs.

14. Foreign Currency Exposures:-

The year end foreign currency exposures that were not hedged by a derivative instrument or otherwise are given below.

a. Amounts receivable in foreign currency on account of the following:

As at

Particulars 31.03.2009 31.03.2008


Export of goods and services

7,427.60

USD 12.18 3,967.51 USD 6.79

AUD 3.52 AUD 1.52

EUR 0.03 EUR 1.08

Sale of rights 83.04 USD 0.21

b. Amounts payable in foreign currency on account of the following:

As at

Particulars 31.03.2009 31.03.2008


ECB Loans 943.04

USD 1.48 533.31 USD 0.65

AUD 0.55 AUD 0.75

Import of goods and services

5,374.71

USD 8.98

2,749.95

USD 5.51

AUD 0.34 EUR 0.10

JPY 136.64 AUD 0.19

– JPY 35.50

GBP0.0003

Packing Credit Loan (PCFC) 2,717.55 USD 6.51

EUR 0.17

Taxes – – – –

Customer advances 183.61 USD 0.36 127.10 USD 0.32

Note: FX = Foreign Currency; USD = US Dollar; EUR = Euro; JPY = Japanese Yen; GBP = British Pound; AUD = Australian Dollar

103

c. Derivative Instruments

The Group uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Group’s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Group’s Risk Management Policy. The Group does not use forward contracts for speculative purposes.

Outstanding Forward Exchange Contracts entered into by the Group: -

As at No. of Contracts

US Dollar Equivalent

(million)

INR Equivalent

(Rs. lacs)

Purpose

31.03.2009 6 USD 4.28 2,169.29 To hedge accounts receivable and payable in foreign currency.

9 JPY 267.90 1,373.07

31.03.2008 3 USD 0.53 213.13

15. Provision held in respect of indirect matters in dispute: Rs. lacs

Particulars 2008-09 2007-08

Carrying amount as at 31st March 25.21 –

Additional provisions made during the year 274.33 66.21

Total 299.54 66.21

Payments made adjusted against above sum 114.33 (41.00)

Balance as at 31st March 185.21 25.21

16. Previous year’s figures have been regrouped / restated wherever necessary to conform to the classification of the current year.

Signature to Schedules 1 to 20


HOMI R. KHUSROKHAN

}Directors





104

RALLIS



Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies

Rs. lacs

Name of the subsidiary company

Financial year of the subsidiary company

Number of Shares held by Rallis India Limited

Net aggregate of profits/(losses) thereof for the financial year as concerning the members of Rallis India Limited

Net aggregate of profits/(losses) thereof for previous years as concerning the members of Rallis India Limited

Dealt with in the accounts for the year ended 31/03/09

Not dealt with in the accounts for the year ended 31/03/09

Dealt with in the accounts for the year ended 31/03/09

Not dealt with in the accounts for the year ended 31/03/09

1 2 3 4 5 6 7

Rallis Australasia Pty Ltd.

1/4/2008 to 31/03/2009

1,000 – 105.73 – 43.93

On behalf of the Board





Summary of Financial Information of Wholly Owned Subsidiary namely, Rallis Australasia Pty Ltd.

Rs. lacs

Particulars 2008-09

Capital 0.35

Reserves 139.36

Total Assets 1,559. 80

Total Liabilities 1,559. 80

Investments –

Turnover/Total Income 1,448.70

Profit Before Tax 156.22

Provision for Taxation (50.48)

Profit After Tax 105.73

Proposed Dividend –

The financial statements of subsidiaries are converted into Indian Rupees on the basis of appropriate exchange rate

105

FINANCIAL STATISTICSYear-end Financial Position Rs. lacs

2009 2008 2007 2006 2005 2004 2003 2002 2001 2000

Net Fixed Assets 18,766 14,787 14,411 16,528 18,186 17,665 15,608 16,079 17,440 18,395

Deferred Tax Assets 1,016 1,323 1,222 336 – – – – – –

Investments 13,616 5,551 3,173 4,948 46 309 2,663 2,383 3,165 3,213

Total 33,397 21,661 18,805 21,812 18,231 17,973 18,270 18,462 20,605 21,608

Current Assets 34,727 33,431 31,428 30,420 26,979 38,055 54,402 63,606 58,569 58,226

Current Liabilities 25,914 20,022 25,791 23,650 17,747 20,374 33,265 35,742 25,043 27,377

Net Current Assets 8,813 13,409 5,637 6,770 9,232 17,681 21,137 27,864 33,526 30,849

TOTAL CAPITAL EMPLOYED 42,210 35,070 24,443 28,582 27,463 35,654 39,408 46,326 54,131 52,457

Capital

– Preference 8,800 8,800 8,800 8,800 8,800 8,800 – – 1,800 2,000

– Equity 1,198 1,198 1,198 1,198 1,198 1,198 1,198 1,198 1,198 1,198

Total 9,998 9,998 9,998 9,998 9,998 9,998 1,198 1,198 2,998 3,198

Reserves 24,869 20,755 11,179 7,563 4,618 7,255 6,707 12,338 9,726 12,526

Less: Debit Balance in Profit & Loss A/c. – – – – – 4,969 2,155 – – –

Less: Miscellaneous Expenditure 713 73 214 544 1,006 1,551 1,653 1,223 1,153 1,193

Net Worth 34,155 30,680 20,963 17,017 13,610 10,733 4,098 12,314 11,571 14,531

Borrowings

– Short term 7,455 3,604 2,541 2,901 5,607 16,236 30,513 28,239 25,923 25,093

– Long term 600 785 938 8,664 8,246 8,686 4,797 5,773 16,637 12,833

Total 8,055 4,389 3,479 11,565 13,853 24,921 35,310 34,012 42,560 37,926

TOTAL SOURCES 42,210 35,070 24,443 28,582 27,463 35,654 39,408 46,326 54,131 52,457

Summary of Operations

Sales (including Excise) 90,683 73,966 67,680 65,275 60,350 54,586.62 88,508 103,768 108,890 143,251

Other Income 2,262 11,163 8,378 3,900 5,332 11,752.68 3,921 16,884 3,504 2,592

Total Income 92,946 85,129 76,058 69,175 65,682 66,339 92,429 120,652 112,394 145,843

Expenses

Materials consumed 50,557 40,844 40,339 37,025 33,420 30,202 67,112 78,054 79,412 110,950

Personnel cost 7,274 6,135 5,520 5,165 5,281 5,631 5,654 4,988 5,054 5,122

Excise duty 7,291 6,847 5,475 6,140 6,241 5,667 3,919 5,185 6,073 4,657

Interest 326 409 1,089 841 1,449 3,956 4,152 4,222 6,258 5,518

Depreciation 2,295 2,007 3,100 1,675 1,611 1,703 1,522 1,415 1,564 1,365

Other expenses 14,603 14,270 15,034 13,874 14,264 16,562 17,784 20,442 15,807 15,726

Total 82,345 70,512 70,557 64,721 62,266 63,721 100,142 114,307 114,168 143,338

Profit before tax and prior year adjustment 10,601 14,617 5,502 4,453 3,416 2,619 (7,714) 6,345 (1,774) 2,505

Tax 3,472 2,098 (309) 201 67 64 (342) (1,349) (512) 47

Profit after tax before prior year adjustment 7,129 12,519 5,811 4,252 3,350 2,555 (7,372) 7,694 (1,262) 2,458

Prior year's adjustment – – – – – – 355 1,820 1,296 –

Profit after tax 7,129 12,519 5,811 4,252 3,350 2,555 (7,727) 5,874 (2,558) 2,458

IMPORTANT RATIOS

Current Assets: Liabilities 1.3 1.7 1.2 1.3 1.5 1.9 1.6 1.8 2.3 2.1

Debt: Equity 0.2 0.1 0.2 0.7 1.0 2.3 8.6 2.8 3.7 2.6

PBT/Turnover % 11.7 19.8 8.1 6.8 5.6 4.8 (8.7) 6.1 (1.6) 1.7

Return (PBIT) on Capital Employed % 25.9 42.7 27.0 18.5 17.7 18.4 (9.0) 22.8 8.3 15.3

Dividend (per share) 16.0 16.0 8.0 4.0 1.0 – – 10.0 – 6.0

Earnings (per share) 53 98 42 29 22 20 (64) 47 (23) 18

Net Worth (per share) 212 183 101 69 40 16 34 103 82 105

Previous years figures have been regrouped, wherever necessary.

106

RALLIS

Notes

RALLIS INDIA LIMITEDRegistered Office APEEJAY HOUSE 7TH FLOOR 3 DINSHAW VACHHA ROAD CHURCHGATE MUMBAI 400 020

Attendance Slip

I hereby record my presence at the SIXTY-FIRST ANNUAL GENERAL MEETING of the Company at Walchand Hirachand Hall, 4th Floor, Indian Merchants’ Chamber Building, IMC Marg, Churchgate, Mumbai 400 020, on Friday, the 29th May, 2009 at 3.30 p.m.

SIGNATURE OF THE ATTENDING MEMBER/PROXY

NoTES: 1. Shareholder/Proxyholder wishing to attend the meeting must bring this Attendance Slip to the meeting and hand it over at the entrance duly signed.

2. Shareholder/Proxyholder desiring to attend the meeting should bring his/her copy of the Annual Report for reference at the meeting.

RALLIS INDIA LIMITEDRegistered Office APEEJAY HOUSE 7TH FLOOR 3 DINSHAW VACHHA ROAD CHURCHGATE MUMBAI 400 020

ProxyI/We ................................................................................................................................................................................................................................................

of ........................................................in the district of ................................................................................................................................................. being

a Member/Members of the abovenamed Company, hereby appoint ....................................................................................................................

............................................................................................................... of ...................................................................................................... in the district of

.............................................................or failing him .................................................................................... of ........................................ in the district of

.................................................................................................................................as my/our Proxy to attend and vote for me/us and on my/our behalf at the Sixty-first Annual General Meeting of the Company, to be held on Friday, the 29th May, 2009 at 3.30 p.m. or at any adjournment thereof.

Signed this ............................................................................... day of ............................................................................................................................2009

Reference Folio No.:

DP ID/BEN ID Signature

No. of Shares held

This form is to be used * in favour of

the resolution. Unless otherwise instructed, the Proxy will vote as he thinks fit. * against

* Strike out whichever is not desired.

NoTE : The Proxy must be returned so as to reach the Registered Office of the Company, at Apeejay House, 7th Floor, 3, Dinshaw Vachha Road, Churchgate, Mumbai 400 020, not less than FORTY-EIGHT HOURS before the time for holding the aforesaid meeting.

Affix30 PaiseRevenue

Stamp

Previous years’ figures include exceptional items.