vakils - solvay in india | solvay...annual report 2011 3 notice notice is hereby given that the 46th...

vakils

BOARD OF DIRECTORS

Mr. D. D. ChopraChairman Emeritus

Mr. IaN BroWN

Mr. SUrESh TaLWarChairman

Mr. raNJIT paNDIT

Mr. ChEN pU

Mr. YogESh Thar

Mr. MIChEL YBErT

Mr. ThoMaS LEUTNErManaging Director

MS. QUITTErIE DUpoNTrEUE-DE-pELLEporT

THE LAST TEN YEARS

(` Lakhs)

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Share Capital 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56

reserves & Surplus 3548.64 4115.25 4483.83 6541.04 5225.46 5731.36 5706.45 5036.92 4654.94 4255.71

Shareholders Fund 3886.20 4452.81 4821.39 6878.60 5563.02 6068.92 6044.01 5374.48 4992.50 4593.27

Debt 5059.72 4271.04 3073.16 100.00 0 407.01 0 488.11 417.03 343.81

Debt Equity ratio 1.30 0.96 0.64 0.01 0 0.07 0 0.09 0.08 0.07

Net Fixed assets 5332.23 5912.98 6595.44 963.87 1143.49 1289.93 1339.91 1356.31 1565.57 1620.76

Investment 0.03 0.03 0.03 0.03 84.53 84.53 84.53 84.53 84.53 84.15

Net Current assets 3407.51 2788.14 1293.39 1046.54 2571.75 4728.29 4492.32 4288.93 3679.95 3091.23

Net Turnover 25078.44 16108.90 9512.96 12866.20 12843.31 14008.26 14016.63 13333.83 10938.10 9607.12

profit/(Loss) Before Tax (566.61) (368.58) (2304.21) 1962.12 (365.66) 21.39 1301.03 938.83 741.57 952.62

profit/(Loss) after Tax (566.61) (368.58) (2057.21) 1374.82 (445.35) 24.81 881.23 574.43 494.43 649.98

Dividend 0 0 0 50.63 33.76 0 185.65 168.78 84.39 84.39

Tax on Dividend 0 0 0 8.61 5.73 0 26.04 23.67 10.81 10.81

retained Earnings 0 0 0 1315.58 0 24.81 669.53 381.98 399.23 559.94

Earnings per Share (`) (16.79) (10.92) (60.94) 40.73 (12.79) 0.09 26.11 17.02 14.65 19.26

Dividend per Share (`) 0 0 0 1.50 1.00 0 5.50 5.00 2.50 2.50

Book Value per Share (`) 115.13 131.91 142.83 203.77 164.80 179.79 179.05 159.22 147.90 136.07

Mr. SaNJEEV MUKErJEE

DIRECTORSD. D. Chopra Chairman EmeritusSuresh Talwar ChairmanMichel Ybert (Alt. Ms. Quitterie Dupontreue De Pelleport)Chen PuIan Brown (Alt. Suresh Talwar) Ranjit PanditSanjeev MukerjeeYogesh TharThomas Leutner Managing Director

AUDIT COMMITTEEYogesh Thar ChairmanSanjeev MukerjeeThomas Leutner

LEGAL MANAGER & COMPANY SECRETARY Niranjan Ketkar

AUDITORSB S R & Co.

SOLICITORSCrawford Bayley & Co.

BANKERSState Bank of IndiaCorporation BankBNP Paribas

REGISTERED OFFICEPhoenix House, “A” Wing, 4th Floor462, Senapati Bapat MargLower Parel (West)MuMBAI - 400 013

REGISTRARS & SHARE TRANSFER AGENTSLink Intime India Private LimitedC-13, Pannalal Silk Mills CompoundLBS Marg, Bhandup (West)MuMBAI - 400 078Tel.: 91-22-25963838

WORKS1. AMBERNATH - 421 501 Dist. Thane, Maharashtra2. ROHA - 402 116 Dist. Raigad, Maharashtra

ANNUAL REPORT 2011

C O N T E N T S

Notice 3

Directors’ Report 8

Corporate Governance Disclosures 11

Auditors’ Report 21

Balance Sheet 24

Profit & Loss Account 25

Cash Flow Statement 26

Schedules to the Account 28

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Annual Report 20112

Rhodia Specialty Chemicals India Limited

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Annual Report 2011 3

NOTICENotice is hereby given that the 46th Annual General Meeting of the Company will be held on Tuesday, 29th May 2012, at 11.00 a.m. at the Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai 400 021 to transact the following business:

ORDINARY BUSINESS1. To receive, consider and adopt the audited Balance

Sheet as at 31st December, 2011, the Profit & Loss Account for the year ended 31st December, 2011 and the reports of the Directors’ and Auditors thereon.

2. To appoint a Director in place of Mr. Michel Ybert, who retires by rotation, and being eligible, offers himself for re-appointment.

3. To appoint a Director in place of Mr. Sanjeev Mukerjee, who retires by rotation, and being eligible, offers himself for re-appointment.

4. To appoint B S R & Co., Chartered Accountants, as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting.

SPECIAL BUSINESS5. To consider and if thought fit, to pass with or

without modification, the following as a Special resolution:

“RESOLVED THAT pursuant to provisions of Sections 198, 269, 309, 310 and other applicable provisions, of the Companies Act, 1956, approval of the Company be and is hereby accorded to the appointment of Mr. Thomas Leutner as the Managing Director of the Company for a period of 3 (three) years with effect from 1st October, 2012 to 30th September, 2015 as per the terms and conditions of appointment including remuneration as set out in the Explanatory Statement attached to the Notice, as approved by the Board of Directors (hereinafter referred to as “the Board”) and the Remuneration Committee thereof and as contained in the draft agreement to be executed with Mr. Thomas Leutner, with the authority to the Board to alter, vary, amend the terms and conditions of his appointment including remuneration; subject however, that the remuneration shall not exceed the limits prescribed under Schedule XIII to the Companies Act, 1956, including any modification, amendment or re-enactment thereof.

RESOLVED FURTHER THAT in the event of no profits or inadequacy of profits of the Company in a financial year, Mr. Thomas Leutner, be paid such remuneration including salary, perquisites and other allowances as set out in the Explanatory

Statement, subject however, that in the event the remuneration exceeds the limits as set out in Schedule XIII to the Act, the remuneration shall be paid with the approval of the Central Government.

RESOLVED FURTHER THAT Mr. Thomas Leutner shall ipso facto cease to be the Director of the Company on termination of his employment with the Company or on the ceasing to be an employee of the Company.”

By order of the Board,Mumbai Niranjan Ketkar24th February, 2012 Legal Manager &

Company SecretaryNOTES:1. A member entitled to attend and vote is entitled to

appoint a proxy to attend and vote on poll instead of himself and a proxy need not be a member. To be effective, proxies must be received by the Company at its Registered Office not less than Forty Eight hours before the commencement of the meeting.

2. The register of members and the share transfer books of the Company will remain closed from 22nd May, 2012 to 29th May, 2012 (both days inclusive).

3. Shareholders are requested to notify change of address, if any, and details of their bank account to the Company.

4. For the convenience of shareholders, attendance slip is annexed to the proxy form. Shareholders are requested to affix their signatures at the space provided therefore and hand over the attendance slip at the entrance of the place of meeting. Proxy/Representative of a shareholder should mark on the attendance slip as “Proxy” or “Representative” as the case may be. Shareholders are also requested not to bring with them any person who is not a shareholder.

5. As a measure of economy, copies of the annual report will not be distributed at the annual general meeting. Shareholders are, therefore, requested to bring their copies of the annual report at the meeting.

6. To facilitate easy and cheap transactions in its shares, the Company has dematerialised its shares. Vast majority of the shareholders have already availed of this facility and de-materialised their shareholdings. Shareholders who have not yet de-materialised their shareholdings are requested to avail of this facility and de-materialise their shareholdings at the earliest. In case any guidance is needed, shareholders are requested to get in touch with the Secretarial Department of the Company.

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Annual Report 20114


Item No. 5The Board of Directors at their meeting held on 24th February, 2012 subject to the approval of the shareholders, approved the appointment of Mr. Thomas Leutner as Managing Director of the Company for a period of 3 (three) years from 1st October, 2012 to 30th September, 2015, as per the terms and conditions mentioned in the draft agreement to be entered into with Mr. Thomas Leutner duly approved by the Remuneration Committee.

Mr. Thomas Leutner is a German National and a graduate in Mechanical Engineering from university of Applied Sciences Offenburg, Germany. He has more than 25 years of Industrial experience. He has been working with Rhodia Group of Companies, France, since 1982 in various positions. His last assignment was with Rhodia Acetow, Germany as Marketing & Sales Director.

The terms and conditions of the appointment of Mr. Thomas Leutner as the Managing Director of the Company are as follows:

RemunerationBy way of salary and perquisites as may be decided by the Board but not exceeding ` 3,00,000/- (` Three lakhs only) per month.

PerquisitesThe Managing Director shall be entitled to perquisites as herein below mentioned, the monetary value of which shall be computed in accordance with the Income Tax Rules.

a. Housing The Company will provide the Managing Director

a fully furnished residential accommodation in Mumbai.

b. Expenditure on Children’s Education The Company will pay the school fees for the

Managing Director’s children (up to two) in India.

c. Medical Benefits The Company will reimburse local medical and

hospital expenses incurred by the Managing Director for himself and his family up to one month’s salary.

d. Annual Holidays The Managing Director shall be entitled to

30 days Annual Leave every year for each

11 months service or pro rata. This will constitute the total leave entitlement whether the leave is availed overseas or in India.

e. Holiday passage for children studying outside India/family staying abroad

Return holiday passage once in a year by economy class to the Managing Director’s children and to the members of the family from the place of their study or stay abroad to India, if they are not residing in India with the Managing Director.

f. Leave Travel Concession The Managing Director shall be entitled to return

air fare passage by economy class for himself and his family once in a year in accordance with the Company rules where it is proposed that he will spend his leave in his home country instead of anywhere in India.

g. Club Fees The Managing Director shall be entitled to

membership subscription of one club of his choice.

h. Company’s car with Driver The Managing Director shall be provided with

Company’s car with driver with all expenses of running and maintenance borne by the Company.

i. Telephones The Managing Director shall be provided with

telephones with all expenses borne by the Company.

j. Entertainment Expenses The Company will pay/reimburse entertainment

expenses incurred by the Managing Director for the Company’s business.

k. Expenses for transportation on termination of the Contract

upon the Managing Director leaving India at the end of his contract, the Company will bear all the expenses to be incurred for transportation of all the Managing Director’s personal belongings from Mumbai to his home country or to the country where he will be taking up his next assignment.

l. Provident Fund The Managing Director is eligible to become a

member of Company’s contributory Provident Fund Scheme.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) READ WITH SECTION 192A OF THE COMPANIES ACT, 1956

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The following is the statement of information for the Shareholders pursuant to Paragraph (B) of Section II of Part II of Schedule XIII of the Companies Act, 1956:

I. GENERAL INFORMATION

1. Nature of Industry : Chemical2. Date or expected date

of commencement of commercial production

: During the year 1967

3. In case of new Companies, expected date of commencement of activities as per project approved by financial institutions appearing in the prospectus.

: Not applicable

4. Financial performance based on given indicators:

(` in lakhs)Particulars 2009 2010 2011Net Turnover 9,512.96 16,108.90 25,078.44Profit/(Loss) Before Tax (2,304.21) (368.58) (566.61)Profit/(Loss) After Tax (2,057.21) (368.58) (566.61)

5. Export performance and net foreign exchange collaborations:

(` in lakhs)Financial Year Export Turnover2009 388.212010 1,018.422011 2,192.72

6. Foreign investments or collaborations, if any. For the financial years 2009 to 2011, the

Company did not have any fresh foreign investments or collaborations.

II. INFORMATION ABOUT THE APPOINTEE 1. Background details: Mr.Thomas Leutner is a graduate in Mechanical

Engineering from university of Applied Sciences Offenburg, Germany. He has more than 25 years of Industrial experience. He has been working with Rhodia Group of Companies, France, since 1982 in various positions. His last assignment was with Rhodia Acetow, Germany as Marketing & Sales Director.

2. Past remuneration : ` 3,50,000/- p.m. 3. Recognition or awards : NIL 4. Job profile and his suitability: Mr. Thomas Leutner, is a graduate in

Mechanical Engineering from university of Applied Sciences Offenburg, Germany. He has more than 25 years of Industrial experience. He has been working with Rhodia Group of Companies, France, since 1982. His last assignment was with Rhodia Acetow, Germany as Marketing & Sales Director.

The Board of Directors is of the opinion that Mr. Thomas Leutner’s experience will be of immense use to the Company to achieve growth in future. He shall be responsible for the management of the affairs of the Company.

5. Remuneration proposed: As per details mentioned in the explanatory

statement to the Special Resolution. 6. Comparative remuneration profile with respect

to industry, size of the Company, profile of the position and person:

The proposed remuneration (duly approved by the Remuneration Committee) is in line with the trends in the industry and is befitting Mr. Thomas Leutner’s experience and competence.

7. Pecuniary relationship directly or indirectly with the Company or relationship with the managerial personnel, if any:

Mr. Thomas Leutner has no other relationship with the Company or with the managerial personnel, except the remuneration being paid to him as Managing Director of the Company.

III. OTHER INFORMATION 1. Reasons for loss or inadequate profits: Low profit margin and interest cost are the

major factors for incurring the loss. 2. Steps taken or proposed to be taken for

improvement: The Company has taken several steps inter

alia, improving the capacity utilization and continues to search for a buyer for the industrial land in Ambernath.

3. Expected increase in productivity and profits in measurable terms:

The surfactant manufacturing capacity at Roha plant has been increased from 5,000 MTPA to 19,000 MTPA and the said plant is likely to achieve substantial level of production in the coming years, which, in turn, is expected to bring a turnaround in the profits also.

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Annual Report 20116


IV. DISCLOSURES Remuneration package as mentioned in the

explanatory statement to the Special Resolution: The shareholders’ approval is sought for the terms

and conditions of the appointment and payment of remuneration to Mr. Thomas Leutner.

The draft agreement to be entered into between the Company and Mr. Thomas Leutner is available for inspection at the Registered Office of the Company between 11.00 a.m. and 1.00 p.m. on any working day of the Company.

Except Mr. Thomas Leutner, none of the Directors is interested in the resolution.

The terms of remuneration as contained in the explanatory statement to the Special Resolution may be treated as an abstract under Section 302 of the Companies Act, 1956.

By order of the Board,Mumbai Niranjan Ketkar24th February, 2012 Legal Manager &

Company Secretary

Details of Directors seeking Re-appointment at the Annual General MeetingParticulars Mr. Michel Ybert Mr. Sanjeev Mukerjee Mr. Thomas Leutner Date of Birth 19th January, 1951 6th July, 1942 8th December, 1957Date of Appointment

13th February, 2004 15th July, 1998 1st October, 2009

Qualifications HEC Graduate B.A. Engineering from Cambridge university, u.K.Chartered Engineer, u.KMember–Institution of Production Engineers

Graduate Engineer

Experience in specific functional area

He is the President of Rhodia Asia Pacific Pte Ltd., and in charge of Asia Pacific operations of Rhodia.He has 37 years of Industrial Experience. He has worked for many Companies in different capacities.He has been working with Rhodia Group of Companies since 2003.He has wide experience in areas of operations, marketing, finance, legal.

He is a member of Pandit family.He is the Managing Director of Magic Eye Private Limited which is a manufacturer and exporter of Small Leather Products – Wallets, Handbags, Office equipment, Gift items, Luggage etc.Suppliers to Filofax, Selfridges, Warehouse, Bijenkorf, Globus, Burton, River Island.

Besides Managing Director of our Company, he is the Country Manager of India and in-charge of operations, marketing and all aspects of the Company.He has 28 years of Industrial Experience. He has worked with Rhodia Group Companies since 1982. He has worked in areas of Operation, Sales and Marketing. Before joining the Company, he was the Marketing and Sales Director of Rhodia Acetow, Germany.

Directorships held in other public companies (excluding foreign companies and section 25 companies)

1. Hindustan Gum and Chemicals Limited 2. Rhodia Korea Co., Ltd. 3. Rhodia Silica Korea Co., Ltd. 4. Rhodia Japan Ltd. 5. Rhodia Chemicals Pty. Ltd. 6. Rhodia Asia Pacific Pte. Ltd. 7. Rhodia Amines Chemicals Pte. Ltd. 8. Rhodia (China) Co., Ltd. 9. Rhodia Polyamide (Shanghai) Co., Ltd.10. Rhodia-Hengchang (Zhangjiagang) Specialty

Chemical Co., Ltd.11. Liyang Rhodia Rare Earths

New Materials Co., Ltd.12. Rhodia (Zhenjiang) Chemicals Co., Ltd.13. Beijing Rhodia Eastern Chemical Co., Ltd.14. Rhodia Silica Qingdao Co., Ltd.15. Rhodia Fine Chemical Additives Qingdao Co., Ltd.16. Guangxi Laibin Bioqi New Energy Co., Ltd.17. Rhodia Feixiang Specialty Chemicals Co., Ltd.18. Zhuhai Rhodia Specialty Chemicals Co., Ltd.

1. Industrial Leather Company Pvt. Ltd.

2. Bombay Hides & Skin Pvt. Ltd.

3. Magic Eye Pvt. Ltd.4. Pratap Pandit Pvt. Ltd.5. Heritage and

Environment Protection Association

Hindustan Gum and Chemicals Limited

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Particulars Mr. Michel Ybert Mr. Sanjeev Mukerjee Mr. Thomas Leutner Memberships/ Chairmanships of committees of other public companies and Shareholders/ Investors Grievance Committee)

NIL NIL NIL

Number of shares held in the Company

NIL 980 NIL

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Annual Report 20118


We present our report together with the audited accounts of the Company for the year ended 31st December, 2011.

Financial Highlights(` in lakhs)

2011 2010Net Sales & Processing charges 25,078 16,109Other Income 377 694Total Income 25,455 16,803Profit/(Loss) before Depreciation and Tax 215 430Depreciation 782 799(Loss)/ Profit before Tax (567) (369)Net Profit/(Loss) after Tax (567) (369)Add : Balance brought forward from Previous Year 304 672Profit available for appropriation – 303Balance carried to Balance Sheet (263) 303

Total IncomeIncome from sales, processing charges and other income during the year amounted to ` 25,455 lakhs as compared to ` 16,803 lakhs in the Previous Year.

PerformanceThe Company incurred a loss before tax of ` 567 lakhs as against a loss of ` 369 lakhs during the Previous Year. The Company incurred loss in the current year mainly due to depreciation of ` 782 lakhs, interest of ` 446 lakhs (Previous Year: ` 318 lakhs), foreign exchange loss of ` 219 lakhs (Previous Year: gain of ` 58 lakhs). The Company also incurred cost of ` 113 lakhs (Previous Year income of ` 198 lakhs) on account of maintaining Ambernath factory, which adds to the loss.

DividendConsidering the loss incurred by the Company, the Directors are not in a position to declare any dividend for the Financial Year 2011.

Reserves & Surplus In view of the loss incurred by the Company no amount is transferred to General Reserve.

Management Discussion and AnalysisIn the calendar year 2011 sales increased to ` 24,739 lakhs as compared to ` 16,068 lakhs in 2010. This includes raw material sales without margin to tollers to an extent of ` 4,300 lakhs. Excluding this raw material sale, the growth in 2011 amounts to 27%. This growth is partly due to a sharp increase of raw material cost predominantly in the second half of the year, which was reflected in the selling prices. These higher prices, together with the increased production and sales volumes resulted in a consumption of materials amounting to ` 20,727 lakhs versus ` 12,697 lakhs in the year 2010. The employee cost rose by 7.2% from ` 972 lakhs to ` 1,042 lakhs, a moderate increase given the continued inflationary environment in India. The loss from Operations was ` 294 lakhs, compared to a loss of ` 453 lakhs in the Previous Year.The Company is making its best efforts to sell the lease rights of the shut down Ambernath factory. The Company has appointed a real estate company of repute to achieve this objective expeditiously. The Company is taking efforts to increase the number of products whereby the Company will be in a position to increase the margin on sales.The Company has used on an average 88.20% of the installed capacity in the year 2011.

Analysis of Operating Performance(` in Lakhs)

2011 2010 1. Net sales/Income from

operations 25,078 16,109 2. Total operating income 25,282 16,400 3. Total operating expense 25,576 16,852 4. Operating (Loss)/Profit (294) (453) 5. Operating (Loss)/Profit (%) (1.16) (2.76) 6. Operating (Loss)/Profit to

capital employed (%) (7.98) (10.22) 7. Inventory Turnover

(Times) 7.5 7.6 8. Current Ratio 1.6 1.7 9. Debt : Equity Ratio 1.30 0.9610. Production (MT) 73,606 69,68711. Overall capacity

utilization (%) 88.2 83.512. Value of Sales per

Employee 142.82 95.38

DIRECTORS’ REPORT

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Cash Flow Analysis(` in lakhs)

Sources of Funds 2011 2010Cash Flow from operations 797.14 361.52Non operation Cash Flows 6.29 21.64Increase in Bank Borrowings 788.68 1,197.88Sale of Fixed Assets 24.56 486.87Income tax refund – 80.28

1,616.67 2,148.19Utilisation of FundsCapital Expenditure (including plant under construction) 405.51 473.63Interest Paid 446.41 318.77Dividend (Including dividend tax) 0.15 1.19Net change in working capital 53.95 1,098.24Net Increase/(decrease) in cash and cash equivalents 687.07 256.36Income tax payment 23.58 –

1,616.67 2,148.19Non operating cash flow includes interest income received on deposits with government utility companies and from income tax authority along with refunds.Increase in bank borrowings is due to increase in working capital requirement and capital expenditure.Interest expense has increased due to increase in working capital and also increase in cost of borrowings.

Health, Safety & Environment The Company attaches great importance to health and safety of its employees and its neighbourhood. Regular safety audits are being conducted by internal teams as well as external experts. Safety and environmental impact standards are periodically reviewed and upgraded based on these studies. The Company is committed to ensuring a clean environment and make efforts to ensure that not only its premises but also the neighbourhood is not affected adversely by its operations. The Company received the “Maharashtra Safety Award” from the National Safety Council.

Directors’ Responsibility StatementTo the best of our knowledge and belief and according to the information and explanations obtained by us, we make the following statement in terms of Section 217(2A) of the Companies Act, 1956:

1. That in the preparation of the annual accounts for the year ended 31st December, 2011; the applicable accounting standards have been followed along with proper explanations relating to material departures, if any.

2. That such accounting policies as mentioned in Note 1 of Schedule 21 to the annual accounts have been selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st December, 2011 and of the profit of the Company for that year.

3. That proper and sufficient care has been taken 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 frauds and other irregularities.

4. That the annual accounts for the year ended 31st December, 2011, have been prepared on a going concern basis.

DirectorsDuring the year Mr. Michel Ybert and Mr. Sanjeev Mukerjee will retire by rotation at the ensuing Annual General Meeting. Resolutions are being proposed for their reappointment.

Corporate GovernanceAs required under Clause 49 of the Listing Agreement, disclosures on the points relating to Corporate Governance are given in Annexure-I to this report.

Future OutlookThe Company continues in its efforts to increase the utilization of its installed capacities, which will be crucial to achieve an improvement in the operational results. Priority is given to capitalize on the quality of its products and services as well as to optimise its industrial operations and to assure a competitive supply of raw materials. The Company is also taking efforts to increase the product line whereby the Company will be in a position to increase the margin on sales. An equally crucial action remains the identification of a potential buyer for its land in Ambernath which could significantly reduce the Company’s financial debt and interest charges and enhance the profitability.

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Annual Report 201110


EmployeesAs at 31st December, 2011, the Company had 182 employees. We place on record our high appreciation of the contribution of employees at all levels for their co-operation and for reduction of cost of operations, wherever possible.Particulars of employees, as required under Section 217(2A) of the Companies Act, 1956 is not applicable as no employee is drawing the remuneration mentioned in the said section.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings/OutgoThe information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, is given in the Annexure to this report, marked Annexure II.

AuditorsB S R & Co., Chartered Accountants, Auditors of the Company, will retire at the conclusion of the 46th Annual General Meeting. They are eligible for re-appointment and a resolution is being proposed for their re-appointment for approval of the members.

Cost AuditCost Audit Report for the year 2010 was filed with the Ministry of Corporate Affairs on 14th June, 2011.Mr. Kishore Bhatia, Cost Accountant has been appointed as the Cost Auditor of the Company under Section 233B of the Companies Act, 1956 for the year 2011.Cost Audit Report for the year 2011 shall be submitted with the Ministry of Corporate Affairs within six months from the closure of the financial year i.e. on or before 30th June, 2012.

AcknowledgementWe acknowledge the support of our shareholders, suppliers, customers and banks enjoyed by the Company and look forward to their continuing patronage.

For and on behalf of the Board of Directors

Mumbai S. N. Talwar24th February 2012 Chairman

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Annexure ICORPORATE GOVERNANCE DISCLOSURES

In terms of the Clause No. 49 of the Listing Agreement on Corporate Governance, our Company has been complying with the requirements of the said Clause to the extent and in the manner stated hereunder;

(A) Company’s Philosophy on Corporate Governance: The Company’s philosophy on Corporate Governance envisages the attainment of transparency, accountability

and equity in all facets of its operations, and in all its interactions with its stakeholders.

(B) Board of Directors: The Board of Directors comprises of seven Directors (excluding Alternate Directors). Mr. Suresh Talwar,

Chairman, Mr. Sanjeev Mukerjee, Mr. Ranjit Pandit and Mr. Yogesh Thar are Non-Executive, Independent Directors.

The Board met five times during 2011 on the following dates and there was less than four months’ gap between any two meetings:

2nd February 2011, 23rd February 2011, 2nd May 2011, 27th July 2011 and 11th November 2011. The Composition of the Board of Directors and related information as at 31st December, 2011:

Name of the Director Category No. of Board meetings attended

Attendance at last AGM

No. of Membership in Boards of other

Companies*

No. of Membership

in Board Committees**

Mr. Suresh Talwar Alternate to Mr. Ian Brown

5 YES 14 9 (includes 4 chairmanship)

Mr. Sanjeev Mukerjee Independent Non-Executive Director

5 YES NIL 2

Mr. Chen Pu Non-ExecutiveDirector

NIL NO 1 NIL

Mr. Michel Ybert Non-ExecutiveDirector

1 NO 1 NIL

Mr. Ian Brown Non-ExecutiveDirector

NIL NO 1 NIL

Mr. Ranjit Pandit Non-ExecutiveDirector

2 YES 2 NIL

Ms. Quitterie Dupontreue de Pelleport

Alternate to Mr. Michel Ybert

NIL NO 1 NIL

Mr. Yogesh Thar IndependentNon-ExecutiveDirector

5 NO NIL 1 (includes 1 Chairmanship)

Mr. Thomas Leutner Managing Director 5 YES 1 2

* excludes Directorships in Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956 and Alternate Directorships.

** includes chairmanship/membership of only Audit Committees and Shareholders’/Investors’ Grievance Committees constituted under Clause 49 of the Listing Agreement with the Stock Exchange.

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Key information such as annual operating plans, budgets (capital and revenue), monthly and quarterly working results, minutes of Audit Committee and other committees are made available to the Directors. The Board is informed of all material financial and commercial decisions in which any Director has personal interest or where there is any potential conflict of interest.

(C) Audit Committee: This Committee comprises of three members viz. Mr. Yogesh Thar, Mr. Sanjeev Mukerjee and Mr. Thomas

Leutner. It has two Independent Directors viz. Mr. Yogesh Thar and Mr. Sanjeev Mukerjee. Mr. Yogesh Thar is the Chairman of the Committee. Mr. Yogesh Thar being a Practicing Chartered Accountant has extensive financial and accounting knowledge. The other members of the Audit Committee also have long experience in business and are well-conversant with business and finance. The Legal Manager & Company Secretary acts as the Secretary of the Committee. The General Manager – Finance, alongwith the Statutory Auditors and the Internal Auditors are invitees to the meetings of the Committee. The quorum for a committee meeting is two Directors.

The Committee held four meetings on 23rd February 2011, 2nd May 2011, 27th July 2011 and 11th November 2011. The Committee’s powers and role are as stipulated under Clause 49 of the Listing Agreement. The Company has complied with all the applicable Accounting Standards in the preparation and presentation

of its annual accounts. A Certificate to this effect by the Managing Director and Chief of Finance is submitted to the Audit Committee and the Board at the time of consideration of the accounts.

(D) Remuneration Committee: The Company has a Remuneration Committee which consists of three Independent Directors viz.

Mr. Sanjeev Mukerjee, Mr. Yogesh Thar and Mr. Suresh Talwar. The Remuneration Committee did not meet during the year.

Directors’ Remuneration for the year ended 31st December, 2011: Mr. Thomas Leutner – Managing Director

Particulars Amount (` in lakhs)

Salary 27.34Value of perquisites 4.75Total Remuneration 32.09

Non-Executive Indian Directors:Name Sitting Fees

(`)Mr. D. D. Chopra* 80,000Mr. Sanjeev Mukerjee 260,000Mr. Yogesh Thar 180,000Mr. Suresh Talwar 100,000Mr. Ranjit Pandit 40,000Total 660,000

* ceased to be Director w.e.f. 23rd February, 2011.

Shareholding by Directors:Name of Director No. of shares heldMr. Sanjeev Mukerjee 980Mr. Ranjit Pandit 8,846

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None of the other Directors holds any shares in the Company. Mr. Thomas Leutner, the Managing Director has a service contract of three years from 1st October, 2009, with

a notice period of three months by either party. The Company has no Stock Option Scheme for any of its Directors.

(E) Code of Conduct: The Company has adopted a Code of Conduct for its Directors and Senior Management Personnel. All of them

have affirmed their compliance with the Code during the year 2011. The Managing Director’s declaration to this effect is given as Appendix 1 to this report.

(F) Shareholders’/Investors’ Grievance Committee: Mr. Sanjeev Mukerjee, Non-Executive Director, and Mr. Thomas Leutner, Managing Director are the members

of the Committee. The Legal Manager & Company Secretary is the Compliance Officer appointed by the Board of Directors. The Committee held four meetings during the year 2011 on 23rd February 2011, 2nd May 2011, 27th July, 2011

and 11th November 2011. The meetings were attended by all the members of the Committee. Two Complaints relating to non-receipt of exchange share certificate & non-receipt of dividend warrant

were received from shareholders during the year 2011 and the same were redressed. The Company has no outstanding grievance as at 31st December, 2011.

(G) General Meetings: Particulars of General Meetings held are given below:

Date of previous Annual General Meetings

Timing of Annual General Meetings

Venue

17.06.2011 11.00 a.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai-400 021

18.06.2010 5.00 p.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai-400 021

29.05.2009 4.00 p.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai-400 021

All the resolutions set out in the respective notices were passed by the shareholders. One special resolution related to payment of remuneration to the Directors by way of commission had been proposed in the last Annual General Meetings of the Company and the same was passed unanimously.

Resolutions passed through Postal Ballot during 2011: On 21st March 2011 shareholders passed two ordinary resolutions under Section 293(1)(d) to borrow from

time to time exceeding total paid-up and free-reserves of the Company and 293(1)(a) to secure the loans, financial assistances/ credit facilities availed by the Company.

On 22nd April 2011 shareholders passed a special resolution to change the name of the Company from ‘Albright & Wilson Chemicals India Limited’ to ‘Rhodia Specialty Chemicals India Limited’.

(H) Disclosures: (1) Related party transactions: There are no materially significant transactions made by the Company with its promoters, directors

or managerial personnel, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large.

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Details of transactions during the year ended 31st December, 2011 with fellow subsidiaries/associate companies and firms/private companies in which some of the Directors were interested as partners/directors are given below:

Names of Related Parties/Firms Relationships/ Interested Director

Transaction Value

(` in Lakhs)

Nature ofTransaction

Sale of Goods/Rendering of ServicesRhodia Operations S.A.S., France Fellow Subsidiary 911.03 Sale of GoodsRhodia Asia Pacific Pte Ltd., Singapore Fellow Subsidiary 248.39 Sale of GoodsRhodia Inc., uSA Fellow Subsidiary 479.45 Sale of GoodsRhodia Poliamida E Especialidades Ltd. A, Brazil

Fellow Subsidiary 214.87 Sale of Goods

Rhodia Nicca Ltd. Fellow Subsidiary 1.18 Sale of GoodsRhodia uK Ltd. Fellow Subsidiary 17.56 Sale of GoodsRhodia Polymers & Specialties India Pvt. Ltd.

Fellow Subsidiary 122.99 Rendering of Services

Rhodia Asia Pacific Pte Ltd., Singapore Fellow Subsidiary 25.29 Rendering of ServicesRhodia Polyamide Co. Ltd., Korea Fellow Subsidiary 9.00 Rendering of ServicesRhodia Thai Industries Ltd. Fellow Sunsidiary 2.11 Rendering of ServicesRhodia Poliamida E Especialidades Ltd. A, Brazil

Fellow Subsidiary 3.81 Rendering of Services

Rhodia Inc., uSA Fellow Subsidiary 0.57 Rendering of ServicesRhodia (ZHENJIANG) Chemicals Co. Ltd. Fellow Subsidiary 0.94 Rendering of Services

Purchase of Goods/Remuneration Rhodia Asia Pacific Pte Ltd., Singapore Fellow Subsidiary 1203.96 Purchase of Finished

GoodsRhodia Thai Industries Ltd. Fellow Subsidiary 212.89 Purchase of Finished

GoodsRhodia (ZHENJIANG) Chemicals Co. Ltd. Fellow Subsidiary 145.77 Purchase of Finished

GoodsRhodia Thai Holdings Ltd. Fellow Subsidiary 24.02 Purchase of Finished

GoodsMr. Thomas Leutner Key Management

Personnel 32.09 Remuneration

(2) Statutory Compliance: The Company has complied with the requisite regulations relating to capital markets. There were no

penalties or strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.

(I) Means of Communication: Quarterly Financial Results are taken on record by the Board of Directors and submitted to the Stock Exchange

in terms of the requirements of Clause 41 of the Listing Agreement. Quarterly Financial Results are normally published in Free Press Journal and Nav Shakti.

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The Company does not send quarterly/half-yearly results to the shareholders. The Company has its website viz. www.rhodia-chemicals.co.in. The Company regularly updates the website

with details of quarterly results, shareholding patterns and Annual Report etc. The Company has not made any presentations to institutional investors or to the analysts. As regards Management Discussion and Analysis, please refer to the relevant paragraph on the subject in the

Directors’ Report.

(J) General Shareholder Information: (1) Annual General Meeting Date and Time: 29th May, 2012 at 11.00 a.m.

(2) Venue: Convention Hall Y. B. Chavan Centre Gen. Jagannath Bhosale Marg Nariman Point Mumbai - 400 021

(3) Financial Calendar Company follows calendar year as its financial year. The results for every quarter are declared in the

month following the quarter.

(4) Date of Book Closure From 22nd May, 2012 to 29th May, 2012 (both days inclusive).

(5) Listing on stock exchanges The Company’s equity shares are listed on BSE.

(6) Stock code 506230 (7) Market price data (High/Low) Company’s Share Price during each month in the financial year 2011 and

performance in comparison to the BSE Sensex.

Share Price Vs Sensex for 2011 Share Price (in `) BSE Sensex

Month High Low Variation%

High Low Variation%

January 198.00 175.00 -11.62 20,664.80 18,038.48 -12.71

February 208.00 172.05 -17.28 18,690.97 17,295.62 -7.47

March 234.75 181.65 -22.62 19,575.16 17,792.17 -9.11

April 306.00 220.00 -28.10 19,811.14 18,976.19 -4.21

May 290.90 250.35 -13.94 19,253.87 17,786.13 -7.62

June 279.75 259.05 -7.40 18,873.39 17,314.38 -8.26

July 384.00 268.10 -30.18 19,131.70 18,131.86 -5.23

August 431.50 339.00 -21.44 18,440.07 15,765.53 -14.50

September 428.70 362.25 -15.50 17,211.80 15,801.01 -8.20

October 374.90 355.15 -5.27 17,908.13 15,745.43 -12.08

November 400.00 361.50 -9.63 17,702.26 15,478.69 -12.56

December 376.95 360.05 -4.48 17,003.71 15,135.86 -10.98

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(8) Registrar & Share Transfer Agents Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West) Mumbai - 400 078 Tel: 2596 3838 Fax: 25962691/25946969 email: [email protected]

(9) Share Transfer System Physical transfer of shares is processed by the Share Transfer Agents. Transfer of shares is effected and

the share certificates are sent to the transferees within 30 days from the date of receipt, provided the relevant documents are complete in all respects.

(10) Insider Trading Regulations The Company has established procedures for prohibition and regulation of insider trading in its shares,

in accordance with the directions of the Securities & Exchange Board of India. Mr. Niranjan Ketkar, Legal Manager & Company Secretary is the Compliance Officer for the purpose. The Company has complied with the requirements in this regard.

(11) Distribution of Shareholding as on 31st December, 2011Shareholding Level No. of

ShareholdersNo. of shares

held% of

Share Holdingup to 500 2,141 185,516 5.4958501 to 1000 75 58,865 1.74381001 to 2000 37 52,192 1.54622001 to 3000 10 25,842 0.76563001 to 4000 9 32,295 0.95674001 to 5000 3 13,244 0.39235001 to 10000 9 64,324 1.9056Above 10000 9 2,943,322 87.1940TOTAL 2,293 3,375,600 100.0000

(12) Shareholding Pattern as on 31st December, 2011

Category code

Category ofShareholder

Number of shareholders

Total numberof shares

Percentage of shareholding

(A) Shareholding of Promoter and Promoter Group

(1) Indian (a) Individuals/Hindu undivided Family 3 31,686 0.9387

Sub-Total (A)(1) 3 31,686 0.9387(2) Foreign (a) Bodies Corporate 1 2,461,974 72.9344

Sub-Total (A)(2) 1 2,461,974 72.9344Total Shareholding of Promoter and Promoter Group (A) = (A)(1)+(A)(2)

4 2,493,660 73.8731

(B) Public shareholding (1) Institutions(a) Financial Institutions/Mutual Funds/Banks 4 100,120 2.9660(b) Foreign Venture Capital Investors 1 225,507 6.6805

Sub-Total (B)(1) 5 325,627 9.6465

Secy.indd 16 23/04/2012 5:21:13 PM


Category code

Category ofShareholder

Number of shareholders

Total numberof shares

Percentage of shareholding

(2) Non-institutions(a) Bodies Corporate 81 111,869 3.3140(b) Individuals –

i. Individual shareholders holding nominal share capital up to ` 1 lakh

2,170 346,799 10.2737

ii. Individual shareholders holding nominal share capital in excess of ` 1 lakh

3 83,499 2.4736

iii. Clearing Members 11 2,089 0.0619iv. Non Resident Indians (Repat) 7 1,384 0.0410v. Non Resident Indians (Non Repat) 10 2,966 0.0879vi. Foreign Companies 0 0 0vii. Directors & Relatives of Directors 2 7,707 0.2283Sub-Total (B)(2) 2,284 556,313 16.4804Total Public Shareholding (B)=(B)(1)+(B)(2) 2,289 881,940 26.1269TOTAL (A)+(B) 2,293 3,375,600 100.0000

(13) Dematerialization of shares and liquidity: Based on SEBI directive, Company’s shares are traded in dematerialized form. About 97% of total Equity

Capital is held in dematerialized form with NSDL and CDSL as on 31st December, 2011.

(14) There are no outstanding GDRs/ADRs/Warrants or any convertible instruments.

(15) Plant Locations: Ambernath Plant: MIDC Chemical Zone, Ambernath, Dist. Thane, Maharashtra, PIN-421 501. Roha Plant: MIDC Industrial Estate, Dhatav, Dist. Raigad, Maharashtra, PIN-402 116.

(16) Address for Correspondence: Shareholders’ correspondence should be addressed to the Company’s Registrars & Transfer Agents at the

address mentioned herein above at Sr. No. 8.

Shareholders may also contact the Legal Manager & Company Secretary at the Registered Office of the Company at the address mentioned below:

Rhodia Specialty Chemicals India Limited Phoenix House, A Wing, 4th Floor 462, Senapati Bapat Marg, Lower Parel (West) Mumbai - 400 013 Tel: 6663 7100 Fax: 2495 2834

(17) Whistle-blower Policy: The Company has not adopted the “whistle-blower” policy.

(18) Certificate of compliance of mandatory stipulations of Corporate Governance: The certificate issued by Messrs. Alwyn D’souza & Co, Company Secretaries, regarding compliance of

mandatory stipulations of corporate governance in terms of the listing agreement with the Stock Exchange is attached as Appendix 2 to this report.

(19) The Company has presently not adopted the non-mandatory requirements set out in Annexure-1D to the Corporate Governance Code.

Secy.indd 17 23/04/2012 5:21:14 PM



Appendix 1 to Corporate Governance Disclosures for the year 2011The Company has adopted a Code of Conduct for all its Directors and Senior Management Personnel, in compliance of the provisions of Clause 49 of the Listing Agreement.

All the Directors and Senior Management Personnel have affirmed their compliance with the aforesaid Code of Conduct during the year 2011.

Mumbai Thomas Leutner24th February, 2012 Managing Director

Appendix 2 to Corporate Governance Disclosures for the year 2011CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

ToThe MembersRhodia Specialty Chemicals India LimitedMumbai

We have examined all relevant records of Rhodia Specialty Chemicals India Limited (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement with Bombay Stock Exchange Limited for the financial year ended 31st December, 2011. We have obtained all the information and explanations to the best of our knowledge and belief were necessary for the purpose of this certification.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

On the basis of our examinations of the records produced explanations and information furnished, we certify that:

(a) the Company has complied with all the mandatory conditions of the said Clause 49 of the Listing Agreement and;

(b) has not complied with the non-mandatory requirements of the said Clause 49 of the Listing Agreement.

Alwyn D’souza & Co. Company SecretariesDate: 24.02.2012Place: Mumbai

Office Address:12-13, Esplanade, 3rd Floor3, A.K. Nayak Marg,Fort, Mumbai - 400 001

(Alwyn D’souza FCS 5559)(Proprietor)

Certificate of Practice No. 5137

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ANNEXURE IIConservation of Energy & Technology Absorption

A. CONSERVATION OF ENERGY: Energy conservation measures include de-bottlenecking to enhance plant capacity; planned production at

optimum levels; regular monitoring of electricity and fuel consumption and corrective steps where required; utilization of by-product steam; and wet scrubbers to recover heat.

Form A Disclosure of particulars with respect to Conservation of Energy

Power and Fuel Consumption 2011 20101. Electricity: (a) Purchased unit in 000 KWH 8029 8030 Total Amount ` in lakhs 517.12 466.71 Rate/unit (`) 6.44 5.81 (b) Own Generation through Diesel Generator units in KWH 68636 87884 units per Litre of diesel oil 2.65 2.46 Cost/unit (`) 15.92 15.572. Furnace Oil etc. (a) Quantity (K Litres) 593 776 Total Amount ` in lakhs 191.05 198.00 Average Rate `/K Litres 32,225 25,527 C9/Kerosene/Slop Oil etc. (b) Quantity (M.T) 97 87 Total Amount ` in lakhs 31.22 23.29 Average Rate `/K Litres 32,322 26,767Consumption per unit of production Electricity

KWH/MT 2011 2010

Fuel (Ltrs./MT)

2011 2010Products1. Sulphuric Acid 31 29 2.9 2.62. Linear Alkyl Benzene Sulphonic Acid 45 41 – –3. Surfactants 252* 272 217* 253

*Decrease due to change in product-mix.

B. TECHNOLOGY ABSORPTION: RESEARCH AND DEVELOPMENT (R&D) 1. Specific Areas in which R&D carried out by the Company: — 2. Benefits derived as a result of above R&D: — 3. Future Plan of Action: Continual improvement in quality, cleaner environment and new product development based on corporate

strategy, reduce waste generation. Being part of the Rhodia Group, the Company has access to Rhodia’s technical assistance.

Secy.indd 19 23/04/2012 5:21:15 PM



4. Expenditure on R&D (` in Lakhs):

2011 2010i Capital – –ii Recurring – –iii Total – –iv Total R&D Expenditure as a percentage of total turnover – –

TECHNOLOGY ABSORPTION AND INNOVATION: As part of Rhodia’s global operation, the Company has access to Rhodia’s technical support in its research efforts.

This is adapted to suit local operations for product and process development as well as quality improvement.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO: Please refer Notes 13, 14 & 15 of Schedule 20 to the Accounts.

Secy.indd 20 23/04/2012 5:21:15 PM


To the Members of Rhodia Specialty Chemicals India Limited (formerly known as Albright & Wilson Chemicals India Limited)

We have audited the attached balance sheet of Rhodia Specialty Chemicals India Limited (formerly known as Albright & Wilson Chemicals India Limited) (‘the Company’) as at 31 December 2011, and the related profit and loss account and cash flow statement for the year ended on that date, 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.

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.

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

2. Further to our comments in the Annexure referred to above, we report that:

(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 appears from our examination of those books;

(c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act;

(e) on the basis of written representations received from the Directors as on 31 December 2011 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 December 2011 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and

(f) in our opinion and to the best of our information and according to the explanations given to us, the said financial statements give the information required by the Act 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 31 December 2011;

(ii) in the case of the profit and loss account, of the loss of the Company for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows of the Company for the year ended on that date.

For B S R & Co.Chartered Accountants

Firm’s Registration No.: 101248WSanjay Aggarwal

Mumbai Partner24 February, 2012 Membership No.: 40780

AUDITORS’ REPORT

Auditor & Acct.indd 21 23/04/2012 4:55:14 PM



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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified once in a period of two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, fixed assets have been physically verified by management during the year. No material discrepancies were noted on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory, except goods in transit and stocks lying with third parties, have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with the third parties at the year end, written confirmation has been obtained.

(b) The procedures for the 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) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, the Company has not granted/taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the register maintained under Section 301 of the Act. Accordingly, the provisions of paragraph 4(iii) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories are for the Company’s specialised requirements and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of fixed assets and inventories and with regard to the sale of goods and services. We have not

observed a continuing failure to correct major weaknesses in the internal control system during the course of the audit.

(v) According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section.

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

(vii) The Company has not accepted any deposits from the public during the year.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records, the Company is regular in depositing undisputed statutory dues accrued/deducted including Provident Fund, Employees’ State Insurance, Investor Education and Protection Fund, Income-tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Investor Education and Protection Fund, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues were in arrears as at 31 December 2011 for a period of more than six months from the date they became payable.

There were no dues on account of Cess under Section 441A of the Act since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(b) According to the information and explanations given to us, there are no dues of Wealth tax and Cess which have not been deposited with the appropriate authorities on account of any disputes.

Annexure to the Auditors’ Report – 31 December 2011Referred to in our report of even date:

Rhodia Specialty Chemicals India Limited(formerly known as Albright & Wilson Chemicals India Limited)



(x) The Company does not have any accumulated losses as at the end of the financial year. The Company has not incurred any cash losses in the current and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company did not have any outstanding dues to any financial institution or debenture holders during the year.

(xii) 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.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/ society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

According to the information and explanations given to us, the following statutory dues have not been deposited by the Company on account of disputes:Name of the Statute Nature of the Dues Amount

(` ‘000)Period to which the amount relates

Forum where dispute is pending

Madhya Pradesh Sales Tax Act, 1994

Sales tax including interest and penalty as applicable

91 1998-1999 Deputy Commissioner of Sales Tax (Appeals)

The Central Excise Act, 1944

Excise duty including penalty and additional penalty

16,922 1996-2006 Commissioner of Central Excise and Service Tax Appellate Tribunal

Excise duty including penalty, as applicable

2,640 2000-2002 Assistant Commissioner of Central Excise

Excise duty 784 1999 Commissioner of Central Excise (Appeals)

Excise duty 3,761 2000-2006 Additional Commissioner of Central Excise

The Customs Act, 1962 Custom duty 1,984 2008-2010 Assistant Commissioner of Customs

Customs Duty 20,317 2004-2010 Commissioner of Customs (Appeals)

The Finance Act, 1994 Service tax including penalty

1,140 1999-2009 Central Excise and Service Tax Appellate Tribunal

316 2010-2011 Additional Commissioner of Central Excise

The Income Tax Act,1961

Income Tax 10,219 A.Y. 2009-2010 Commissioner of Income Tax (Appeals)

(xvi) The Company has not obtained any term loans during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, short term funds raised from banks have been used for long term purposes.

(xviii) The Company has not made any preferential allotment of shares during the year to companies/firms/parties covered in the register maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co.Chartered Accountants

Firm’s Registration No.: 101248W

Sanjay Aggarwal Mumbai Partner24 February, 2012 Membership No.: 40780




The Schedules referred to herein above form an integral part of the Balance Sheet.

As per our report of even date attached For and on behalf of the Board of DirectorsFor B S R & Co.

S. N. Talwar Yogesh TharChartered AccountantsChairman DirectorFirm’s Registration No.: 101248W

Sanjay Aggarwal Thomas Leutner Niranjan KetkarPartner Managing Director Legal Manager &Membership No.: 40780 Company Secretary

Rajiv MehtaGeneral Manager – Finance

Mumbai: 24th February, 2012 Mumbai: 24th February, 2012

BALANCE ShEET AS AT DECEMBER 31, 2011(Currency: ` thousands)

Schedule 2011 2010

I. Sources of Funds(1) Shareholders' funds

(a) Share Capital 1 33,756 33,756 (b) Reserves and surplus 2 354,864 411,525

388,620 445,281 (2) Loan funds

(a) Secured loans 3 155,972 155,604 (b) Unsecured loans 4 350,000 271,500

Total 894,592 872,385

II. Application of funds(1) Fixed assets 5

(a) Gross block 1,022,343 1,022,198 (b) Less: Accumulated Depreciation/

Amortisation 489,120 430,900

(c) Net block 533,223 591,298 (d) Capital work-in-progress 8,784 917 (e) Capital Advances 11,831 1,353

553,838 593,568 (2) Investments 6 3 3 (3) Deferred tax assets 7 – – (4) Current assets, loans and advances:

(a) Inventories 8 368,933 289,486 (b) Sundry debtors 9 307,459 183,235 (c) Cash and bank balances 10 94,820 26,113 (d) Other current assets 11 1,418 908 (e) Loans and advances 12 186,849 176,804

959,479 676,546

Less: Current Liabilities and Provisions:(a) Current Liabilities 13 603,169 376,781 (b) Provisions 14 15,559 20,951

618,728 397,732

Net current assets 340,751 278,814 (5) Profit and Loss Account 15 – –

Total 894,592 872,385

Notes to the Accounts 21



PROFIT AND LOSS ACCOUNT FOR ThE YEAR ENDED DECEMBER 31, 2011(Currency: ` thousands)

Schedule 2011 2010

IncomeGross sales 2,687,729 1,735,354 Less: Excise duty 213,843 128,492

Net sales 2,473,886 1,606,862 Processing charges 53,690 4,663 Less: Excise duty 19,732 635

33,958 4,028 Other income 16 37,711 69,365

2,545,555 1,680,255

ExpenditureMaterials cost 17 2,072,714 1,269,735 Personnel cost 18 104,174 97,198 Other expenses 19 302,501 238,364 Depreciation/Amortisation 5 78,186 79,939 Interest 20 44,641 31,877

2,602,216 1,717,113

(Loss) before taxation (56,661) (36,858)Provision for taxation Current tax – – Deferred tax – –

(Loss) after taxation (56,661) (36,858)

(Loss) from Continuing Operations before taxation (45,370) (56,673)Less: Income Tax expense – –

(Loss) from Continuing Operations after taxation (45,370) (56,673)(Loss)/Profit from ordinary activities of Discontinuing Operation before taxation (Refer Note 22 of Schedule 21) (11,291) 19,815 Less: Income Tax expense – –

Profit/(Loss) from ordinary activities of Discontinuing Operation after taxation (11,291) 19,815

(Loss) after taxation (56,661) (36,858)Balance brought forward from previous year 30,355 67,213

Balance carried over (Refer Schedules 2 and 15) (26,306) 30,355

Earnings per equity share (Refer Note 18 of Schedule 21)Basic and diluted earnings per equity share (in `) (16.79) (10.92)Notes to the Accounts 21

The Schedules referred to herein above form an integral part of the Profit & Loss Account.









Cash Flow Statement for the year ended December 31, 2011 (Contd.)(Currency: ` thousands)

Year ended December 31, 2011


Cash flow from operating activities

Net (Loss)/ Profit before taxation and exceptional items (56,661) (36,858)

Adjustments for non-cash items/items required to be disclosed separately:

Depreciation/Amortisation 78,186 79,939

Interest expenses 44,641 31,877

(Profit)/Loss on sale/write off of fixed assets (net) (1,834) (35,954)

Unrealised foreign exchange (gain)/loss (net) 16,085 (685)

Interest income (703) (2,167)

136,375 73,010

Operating (loss)/profit before changes in working capital 79,714 36,152

Adjustments for changes in Working Capital and Provisions:

Sundry debtors, Other current assets and Loans & advances (129,794) (65,233)

Inventories (79,447) (153,817)

Current liabilities 209,238 108,462

Provisions (5,392) 764

(5,395) (109,824)

Cash generated from/(used in) operations 74,319 (73,672)

Income-tax paid (net of refunds) (2,358) 8,028

Cash flow before exceptional items 71,961 (65,644)

Exceptional items

A. Net cash from/(used in) operating activities 71,961 (65,644)

Cash flow from Investing activities

Fixed Assets

Purchase (Note 2) (40,551) (47,363)

Sale 2,456 48,687

Interest Received 629 2,164

B. Net cash used in investing activities (37,466) 3,488








Cash Flow Statement for the year ended December 31, 2011 (Contd.)(Currency: ` thousands)



Cash flow from financing activities Increase/(Decrease) in short term borrowing from

banks 78,500 31,500 Increase/(Decrease) in cash credit 368 88,288 Interest paid (44,641) (31,877) Dividend paid (15) (119) Tax on dividend – –

C. Net cash from/(used) in financial activities 34,212 87,792

Net change in cash and cash equivalents 68,707 25,636

Cash and Cash Equivalents – Opening Balance (See Note 3) 26,113 477

Cash and Cash Equivalents – Closing Balance (See Note 3) 94,820 26,113

Notes:(1) The above cash flow statement has been prepared

under the ‘Indirect Method’.(2) Purchase of fixed assets includes payments for items

in capital work-in-progress and advances of capital nature.

(Currency: ` thousands)As at

December 31, 2011

As at December 31, 2010

(3) Cash and Cash equivalents comprise of: Cash on hand 68 13 Cheques on hand 9,209 3,742 Balances with scheduled banks on: Current accounts 53,433 22,358

Deposit accounts 32,110 –

94,820 26,113




Schedules forming part of the Accounts(Currency: ` thousands)

2011 2010

Schedule 1Share Capital

Authorised:

4,000,000 equity shares of ` 10/- each 40,000 40,000

1,000,000 unclassified shares of ` 10/- each 10,000 10,000

50,000 50,000

Issued, Subscribed and Paid-up3,375,600 equity shares of ` 10/- each fully paid-up 33,756 33,756

Of the above,

(a) 105,000 shares were allotted as fully paid-up equity shares, pursuant to a contract, without payment being received in cash.

(b) 1,800,000 shares were issued as fully paid-up bonus shares by capitalisation of development rebate reserve and a part of general reserve.

(c) 2,461,974 shares are held by Rhodia UK Ltd., a subsidiary company of Rhodia SA, France, the ultimate holding Company.

Schedule 2Reserves and surplus

Capital reserve

Subsidy under the special capital incentive scheme (as per last balance sheet)

2,500 2,500

Shares forfeited (as per last balance sheet) 11 11

2,511 2,511

Securities premium account (as per last balance sheet) 31,658 31,658

General reserve (as per last balance sheet) 347,001 347,001

Debit Balance in Profit and Loss Account (as per contra – Schedule 15) 26,306 320,695 – 347,001

Profit and Loss Account – 30,355

354,864 411,525




2011 2010

Schedule 3Secured loansFrom banksCash credit 155,972 155,604 [Secured by hypothecation of stocks of raw materials, stocks in process, semi finished and finished goods, book debts, bills receivable and all the other moveables, both present and future]

155,972 155,604

Schedule 4Unsecured loansShort term loan from bank[amount repayable within one year – ` 350,000(000) previous year ` 271,500(000)](Guaranteed by Rhodia SA, France, the ultimate holding company)

350,000 271,500

350,000 271,500

Schedule 5Fixed Assets (Currency: ` thousands)

Gross Block (At cost) Depreciation/Amortisation Net BlockDescription As at

1.1.2011Addi-tions

Deduc-tions

As at 31.12.2011

As at 1.1.2011

For the year

Deduc-tions

As at 31.12.2011

As at 31.12.2011

As at 31.12.2010

1. Tangible assets:Freehold Land 570 – – 570 – – – – 570 570 Leasehold Land 4,616 – – 4,616 1,284 57 – 1,341 3,275 3,332 Buildings and Roads 205,040 169 11,117 194,092 80,182 15,799 10,637 85,344 108,748 124,858 Plant and Machinery 803,011 20,159 5,216 817,954 343,056 61,253 5,215 399,094 418,860 459,955 Furniture and fittings 3,438 405 1,544 2,299 2,106 758 1,446 1,418 881 1,332 Vehicles 4,893 – 2,081 2,812 3,642 319 2,038 1,923 889 1,251

2. Intangible assets:Patents 420 – 420 – 420 – 420 – – – Technical Know-how 210 – 210 – 210 – 210 – – – Total 1,022,198 20,733 20,588 1,022,343 430,900 78,186 19,966 489,120 533,223 591,298 Previous year 1,173,545 24,426 175,773 1,022,198 514,001 79,939 163,040 430,900 Capital work-in-progress 8,784 917 Capital advances 11,831 1,353

553,838 593,568





2011 2010

Schedule 6Investments (Unquoted, unless otherwise stated)Long Term (at cost)Non-Trade:100 equity shares of ` 25/- each fully paid up in Roha Industries Association's Sahakari Grahak Bhandar Limited 3 3

3 3

Aggregate book value of investments 3 3

Schedule 7Deferred Tax AssetsDeferred Tax LiabilityFixed Assets 39,859 40,867 Deferred Tax AssetUnabsorbed Depreciation 102,113 67,983

102,113 67,983Restricted to* 39,859 40,867

– –

* Deferred tax assets have been recognised only to the extent of deferred tax liability, as this amount is considered to be virtually certain of realisation. The balance deferred tax assets would be recognised on virtual certainty regarding availability of sufficient future taxable profits.

Schedule 8InventoriesStores and spares 26,567 18,385Stock in trade:Raw materials 111,723 132,723Work-in-process 2,775 2,062Packing materials 3,220 2,431Finished goods 224,648 133,885

368,933 289,486




2011 2010

Schedule 9Sundry debtorsDebts outstanding for a period exceeding six months: Unsecured – considered good 826 327 Unsecured – considered doubtful 3,841 4,041

4,667 4,368Other debts: Secured – considered good 545 545 Unsecured – considered good 306,088 182,363

306,633 182,908

311,300 187,276Less: Provision for doubtful debts 3,841 4,041

307,459 183,235

Schedule 10Cash and bank balancesCash on hand 68 13Cheques on hand 9,209 3,742Balances with scheduled banks: on Current accounts 53,433 22,358 on Term deposit 32,110 –

94,820 26,113

Schedule 11Other current assetsInterest accrued on deposits, etc. 510 436Export incentive receivable 908 472

1,418 908





2011 2010

Schedule 12Loans and advances(Unsecured, considered good unless otherwise stated)Advances recoverable in cash or in kind or for value to be received Secured 3,043 2,035 Unsecured 54,288 54,621

57,331 56,656 Deposits 20,145 21,845 Balance with excise authorities, etc. 78,399 69,686 Income tax payments less provisions 30,974 28,617

186,849 176,804

Schedule 13Current LiabilitiesSundry creditors Total outstanding dues of micro enterprises and

small enterprises (Refer Note 5 of Schedule 21) 322 231 Total outstanding dues of creditors other than

micro enterprises and small enterprises 550,619 325,540

550,941 325,771 Payment received under Business Purchase Agreement 44,450 44,450 Deposits received 857 957 Unpaid dividend* 267 282 Other current liabilities 6,654 5,321

603,169 376,781

* There is no amount due and outstanding to be credited to Investor Education and Protection Fund

Schedule 14ProvisionsProvision for Compensated Absences (Refer Note 19 of Schedule 21) 12,937 14,940 Provision for Gratuity (Refer Note 19 of Schedule 21) 2,622 6,011

15,559 20,951




2011 2010

Schedule 15Profit and Loss Account

Debit Balance in Profit and Loss Account 26,306 –

Less: As per contra in General Reserve (Schedule 2) 26,306 –

– –

Schedule 16Other income

Interest on deposits, income tax

_ [Tax deducted at source ` 114(000), Previous year: ` 114(000)] 703 2,167

Indenting commission 3,543 4,206

Export incentives 5,576 1,859

Scrap and sundry sales [net of excise duty ` 139(000), Previous year: ` 391(000)] 3,918 9,206

Sales tax refunds – 1,106

Service fees 8,908 1,800

Liabilities/provisions no longer required written back 6,194 5,287

Write back of provision for doubtful debts 200 1,083

Profit on sale of fixed assets (net) 1,834 35,954

Exchange gain (net) – 5,839

Insurance claim 960 491

Market survey fees 5,418 –

Miscellaneous income 457 367

37,711 69,365





2011 2010

Schedule 17Materials cost(a) Raw Materials consumed Opening stock of raw materials 132,723 43,144 Add: Purchases 1,459,169 1,116,674

1,591,892 1,159,818 Less: Closing stock of raw materials 111,723 132,723

Raw materials consumed 1,480,169 1,027,095

(b) Packing Materials consumed Opening stock of packing materials 2,431 2,711 Add: Purchases 41,040 36,012

43,471 38,723 Less: Closing stock of packing materials 3,220 2,431

Packing materials consumed 40,251 36,292

(c) Purchase of traded items 643,770 264,525

(d) (Increase)/Decrease in stock of finished goods and work-in-progress

Finished goods Opening stock 133,885 76,809 Less: Closing stock 224,648 133,885

(90,763) (57,076) Work-in-Progress Opening stock 2,062 961 Less: Closing stock 2,775 2,062

(713) (1,101)(91,476) (58,177)

2,072,714 1,269,735

Schedule 18Personnel costSalaries, wages, allowances and bonus 90,136 78,437 Contribution to provident, gratuity and other funds (Refer Note 19 of Schedule 21) 7,645 12,527 Staff welfare expenses 6,393 6,234

104,174 97,198




2011 2010

Schedule 19Other expensesConsumption of stores and spare parts 25,499 27,785 Power and fuel 78,286 71,625 Rent [net of recovery ` 4,126(000), Previous year ` 199(000)]

21,860 24,194

Repairs and maintenance – Buildings 7,207 3,386 – Plant and machinery 13,676 13,895 – Others 3,320 1,485

24,203 18,766 Insurance (net) 3,539 3,101 Rates and taxes 8,516 2,231 Excise duty [Refer Note 20(b) of Schedule 21] 4,583 7,729 Sub-contract charges 14,947 10,950 Transport charges 3,181 2,664 Water charges 4,153 5,252 Travelling and conveyance 10,086 8,728 Legal and professional fees 15,320 8,798 Communication 3,286 3,277 Printing and stationery 1,583 1,323 Computer maintenance and software 2,837 3,640 Directors' sitting fees 660 880 Auditors' remuneration Audit fees 632 565 Other services 300 325 Out of pocket expenses 43 34

975 924 Donations – 50 Bank charges 10,476 5,545 Sales commission 1,370 2,337 Freight and forwarding expenses (net) 28,733 10,748 Advertising and sales promotion 1,272 513 Recruitment expenses 1,778 1,032 Bad Debts written off 63 131 Provision for doubtful debts – 4,041 Exchange loss (net) 21,986 – Miscellaneous Expenses 13,309 12,100

302,501 238,364

Schedule 20Interest on fixed period loan 42,992 29,202 others 1,649 2,675

44,641 31,877




Schedules forming part of the AccountsSchedule 21Notes to the Accounts1. Significantaccountingpolicies a) Basisofpreparationoffinancialstatements The financial statements have been prepared and presented under the historical cost convention on an

accrualbasisofaccountingandinaccordancewiththeprovisionsoftheCompaniesAct,1956(‘theAct’)andaccountingprinciplesgenerallyacceptedinIndiaandcomplywiththeaccountingstandardsprescribedintheCompanies(AccountingStandards)Rules,2006issuedbytheCentralGovernmentinconsultationwiththeNationalAdvisoryCommitteeonAccountingStandards,totheextentapplicable.

b) Use of estimates Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciples(GAAP)

inIndiarequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentliabilitiesonthedateofthefinancialstatements.Actualresultscould differ from these estimates.Differencebetween the actual results and estimates are recognised inthe period inwhich results are known/materialized. Any revision to accounting estimates is recognisedprospectivelyincurrentandfutureperiods.

c) Fixed assets and depreciation Fixedassetsarecarriedatcostofacquisitionorconstructionlessaccumulateddepreciation.Costincludes

allinwardfreight,duties,taxesandincidentalexpenses.Borrowingcostsdirectlyattributabletoacquisitionorconstructionofthosefixedassetswhichnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendedusearecapitalised.

Assetsindividuallycosting`5,000orlessaredepreciatedfullyintheyearwhentheassetsareputtouse. Depreciationonotherdepreciableassets iscalculatedon theStraightLineMethod (SLM)pro-rata to the

periodofuseatratesbasedonestimatedusefullifeofassets.TheratesusedarehigherthantheratesspecifiedinScheduleXIVtotheCompaniesAct,1956andareasfollows:

Asset Description Rates – BuildingandRoads–Factory 10% – BuildingandRoads–OtherthanFactory 5% – PlantandMachinery 10%/12.5%/15% – Computers 33.33% – FurnitureandFittings 10% – Vehicles 20% LeaseholdLandisamortisedequallyovertheperiodofthelease. Impairment of Assets Managementperiodicallyassessesusingexternalandinternalsourceswhether thereisanindicationthat

anassetmaybeimpaired.Impairmentoccurswherethecarryingvalueexceedstherecoverableamount. The impairment loss tobeexpensed isdeterminedas theexcessof thecarryingamountover thehigher of theassetsnetsellingpriceorpresentvalueof futurecashflowsexpectedtoarise fromthecontinuing useoftheassetsanditseventualdisposal.

d) Investments Long-term investments are statedat cost less anyother than temporarydiminution in value,determined

separatelyforeachindividualinvestment. e) Inventories Inventoriesarevaluedat lowerofcostandnet realisablevalueexcept forby-productswhicharevalued

atnetrealisablevalue.Costisdeterminedonthemoving/monthlymovingweightedaveragebasisexceptthatofgoodsintransitwhichisascertainedonspecificidentificationbasis,andincludeswhereapplicable,appropriatemanufacturingoverheads.Thecostinthecaseofwork-in-processcomprisesdirectmaterialcostandfinishedgoodscomprisedirectmaterials,labour,utilitiesandappropriatecostofconversion.Thecostoftradedfinishedgoodsisdeterminedonmovingweightedaveragebasis.

Rawmaterialsandothersuppliesheldforuseinproductionofinventoriesarenotwrittendownbelowcostexceptincaseswherematerialpriceshavedeclined,anditisestimatedthatthecostofthefinishedproductswillexceedtheirnetrealisablevalue.

NOTES.indd 36 4/23/2012 5:28:39 PM


Schedules forming part of the Accounts

NoninclusivemethodofaccountingisconsistentlyfollowedforCenvatundertheCentralExciseAct,1944,withregardtoinventories,purchasesandconsumption.

f) Employeebenefits i) ShortTermEmployeeBenefits: Allemployeebenefitspayablewhollywithintwelvemonthsofrenderingtheserviceareclassifiedas

short-termemployeebenefits.Thesebenefitsincludecompensatedabsencessuchaspaidannualleaveandsicknessleave.Theundiscountedamountofshort-termemployeebenefitsexpectedtobepaidinexchangefortheservicesrenderedbyemployeesisrecognizedduringtheperiod.

ii) PostEmploymentBenefits: a. DefinedContributionPlans TheCompany’s liability for superannuation scheme,which is a defined contribution scheme, is

fundedthroughaschemeadministeredbyLifeInsuranceCorporationofIndia(LIC).ContributionspayableunderthisschemearechargedtoProfitandLossAccountasincurred.

ContributionstotherecognizedstatutoryProvidentFund,whichisadefinedcontributionscheme,arechargedtotheProfitandLossAccountintheperiodinwhichtheliabilityisincurred.

b. DefinedBenefitPlans Provisionforgratuity,whichisadefinedbenefitplan,ismadeonthebasisofanactuarialvaluation

carriedoutbyanindependentactuaryatthebalancesheetdateandisfundedthroughaschemeadministeredbytheLIC.Theactuarialvaluationisdoneusingthe‘ProjectUnitCreditMethod’.Thediscountratesusedfordeterminingthepresentvalueofthedefinedbenefitobligation,arebasedonthemarketyieldsonGovernmentsecuritiesasatthebalancedate.Actuarialgainsandlossesarerecognizedimmediatelyintheprofitandlossaccount.

iii) OtherLong-termemploymentbenefits Compensatedabsenceswhicharenotexpectedtooccurwithintwelvemonthsaftertheendoftheperiod

inwhichtheemployeerenderstherelatedservicesarerecognizedasaliabilityatthepresentvalueofthedefinedbenefitobligationat thebalancesheetdate.Thediscount ratesused fordetermining thepresentvalueofthedefinedbenefitobligationarebasedonthemarketyieldsonGovernmentsecuritiesasatthebalancesheetdate.Actuarialgainsandlossesarerecognizedimmediatelyintheprofitandlossaccount.

g) Revenue recognition Revenue fromsaleof goodsandprocessingcharges is recognizedon transferof all significant risksand

rewards of ownership to the buyerwhich generally coincideswith the despatch of goods. The amountrecognizedassalesisexclusiveofsalestax/valueaddedtaxandtradediscounts.

Indentingcommissionisaccountedforonreceiptofintimationofsupplyfromforeignsuppliers. Dividendincomeisrecognisedwhentherighttoreceivepaymentisestablished. Interestincomeisrecognisedonatimeproportionbasis. h) Foreign exchange transactions Transactions denominated in foreign currency are recorded at exchange rate prevailing on the date of

transaction. Exchange differences arising on foreign exchange transactions settled during the year arerecognizedintheprofitandlossaccount.

Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesasatthebalancesheetdatearetranslatedattheclosingexchangerateonthatdateandtheresultantexchangedifferencesarerecognisedintheprofitandlossaccount.Inrespectoftransactionscoveredbyforwardexchangecontractswhicharenotintendedfortradingorspeculationpurposes,premiumsordiscountsareamortisedasexpenseorincomeoverthelifeofthecontracts.ExchangedifferencesonsuchcontractsarerecognisedasexpenseorasincomeintheProfitandLossAccountintheyearinwhichtheexchangerateschange.Profitorlossarisingoncancellationorrenewalofsuchforwardexchangecontractsarerecognisedasincomeorasexpensefortheyear.

i) Leases Leaserentalsinrespectofassetsacquiredunderoperatingleasearechargedofftotheprofitandlossaccount

asincurred.

Schedule 21Notes to the Accounts (Contd.)

NOTES.indd 37 4/23/2012 5:28:40 PM




j) Taxation Income-taxexpensecomprisescurrenttax(i.e.amountoftaxfortheperioddeterminedinaccordancewith

incometaxlaws)anddeferredtaxchargeorcredit(reflectingthetaxeffectoftimingdifferencesbetweenaccountingincomeandtaxableincomefortheyear).Thedeferredtaxchargeorcreditandthecorrespondingdeferredtaxliabilitiesorassetsarerecognisedusingthetaxratesthathavebeenenactedorsubstantivelyenactedatthebalancesheetdate.Deferredtaxassetsarerecognizedonlytotheextentthatthereisreasonablecertaintythattheassetscanberealizedinfuture;howeverwhenthereisunabsorbeddepreciationorcarryforward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty ofrealisationofsuchassets.Deferredtaxassetsarereviewedasateachbalancesheetdateandwrittendownorwrittenuptoreflecttheamountthatisreasonably/virtuallycertain(asthecasemaybe)toberealised.

k) Earnings per share Basicanddilutedearningsper sharearecomputedbydividing thenetprofit/(loss) attributable toequity

shareholdersfortheyearbytheweightedaveragenumberofequitysharesoutstandingduringtheyear. l) Provisions and contingencies TheCompanycreatesaprovisionwherethereispresentobligationasaresultofpasteventsthatprobably

requiresanoutflowofresourcesandareliableestimatecanbemadeof theamountof theobligation.Adisclosureforacontingentliabilityismadewhenthereisapossibleobligationorapresentobligationasaresultofpasteventsthatmay,butprobablywillnot,requireanoutflowofresourcesandtheamountcanbereasonablyestimated.Whenthereisapossibleobligationorapresentobligationinrespectofwhichthelikelihoodofoutflowofresourcesisremote,noprovisionordisclosureismade.

2. TheCompanyhasbankborrowingsandcreditorswhicharerepayableintheforeseeablefuture. TheCompany’smanagementbelievesthatitwillbeabletomeetallitsobligationsastheyfalldueforpayment

basedonbankfacilitiesguaranteedbytheparentcompanyaswellascashflowspreparedfortheforeseeablefutureinadditiontointernalaccruals.

As atDecember 31,

2011

AsatDecember31,

2010

` ’000 `’0003. ContingentLiabilitiesnotprovidedforinrespectof:

(a) Excisemattersinrespectof:– Mattersrelatingtoundervaluationofassessablevalue 17,508 17,509– Nonpaymentofdutyonclearanceofgoodsmeantforexportbythecustomer

5,815 5,815

– Availmentofmodvatcredit 784 4,106

24,107 27,430

(b) Customsmattersinrespectof:– Mattersrelatingtodifferentialcustomdutyrateonproduct 22,301 33,743

(c) Incometax(includingfringebenefittax)matters– InrespectofmatterssuchasadditiontothevalueofclosingstockundertheprovisionsofSection145AoftheIncomeTaxAct,1961,disallowances of certain expenditure as revenue expenditure,etc.inrespectofwhichtheCompany/Incometaxdepartmentisinappealwiththefirst/higherappellateauthority

45,261 14,025

– InrespectofmatterswheretheCompanyhasreceivedfavourableorder/partialrelieffromthefirstappellateauthoritybuttheIncomeTax Department is pursuing further with the higher appellateauthority

1,595 1,595


NOTES.indd 38 4/23/2012 5:28:40 PM



As atDecember 31,

2011

AsatDecember31,

2010

` ’000 `’000(d) SalesTax

- Mattersrelatingtocertainsalesconsideredasexemptsalesandsalestaxondiscountsgiventocustomers

174 174

(e) Demandsforpropertytax – 6,754(f) Employeerelatedmatters:

- MatterspendingwiththeLabourCourtforthereinstatementofservicesofcertainex-employees

800 2,000

- MatterspendingwiththeAssistantLabourCommissionerforthepermanentemploymentofcasualworkers

Notascertainable

Notascertainable

(g) MatterspendingwiththeHighCourt/CivilCourtrelatingtocounterclaim/claimagainsttheCompanyfortheallegedbreachofmarketingarrangement/non-paymentforsuppliesmaderespectively

7,991 7,991

(h) BankGuarantees- Inrespectofdifferentialcustomdutyonproducts 3,902 1,892- VATRegistrationunderSection84ofUttarakhandVATactandCentralSalesTaxAct

50 50

- UnderSection33AofWater(P&CP)Act1974andu/s31AoftheAir(P&CP)Act

100 –

(i) ServiceTax 1,455 1,577

Note:Futureultimateoutflowofresourcesembodyingeconomicbenefitsinrespectofmattersstatedunder3(a)to3(i)aboveisuncertainasitdependsonthefinaloutcomeofjudgements/decisionsonthemattersinvolved.

4. Capital Commitments Theestimatedamountofcontractsremainingtobeexecutedoncapitalaccount(netofcapitaladvances)andnot

providedfor,is` 16,977(000)[Previousyear` 1,794(000)].

5. ThesupplierscoveredundertheMicro,SmallandMediumEnterprisesDevelopmentAct,2006(theAct)asgiveninSchedule13-LiabilitiesregardingtheMicroandSmallEnterpriseshasbeendeterminedbasedonthedetailsregardingthestatusofthesuppliersobtainedbytheCompany.Thishasbeenrelieduponbytheauditors.

As atDecember 31,

2011

AsatDecember31,

2010` ’000 `’000

6. (a) Managerial Remuneration(i) ManagingDirector Salariesandallowances 2,734 2,700 Perquisites 475 491

3,209 3,191(ii) Directors’sittingfees 660 880

3,869 4,071


NOTES.indd 39 4/23/2012 5:28:41 PM




As atDecember 31,

2011

AsatDecember31,

2010` ’000 `’000

(b) ComputationofnetprofitsinaccordancewithSection349oftheCompaniesAct,1956Profitbeforetax (A) (56,661) (36,858)Add: Depreciation 78,186 79,939 ManagingDirector’sremuneration 3,209 3,191 Directors’fees 660 880 Provisionfordoubtfuldebts – 4,041 ProfitonsaleofFixedAssetsunderSection350ofthe

CompaniesAct,1956 – 18,093(B) 82,055 106,144

Less: DepreciationasperSection350oftheCompaniesAct,1956 47,767 51,591 AmortisationofLeaseholdLand 57 57 Provisionfordoubtfuldebtswrittenback 200 1,083 ProfitonsaleofFixedAssets 1,834 35,954 LossonsaleofFixedAssetsunderSection350ofthe

CompaniesAct,1956 9,536 32,941

ExcessofexpenditureoverincomeoftheprecedingyearasperSection349oftheCompaniesAct,1956(Includingdirectors’remunerationfortheprecedingyear) 177,624 121,213

(C) 237,018 242,839NetProfitsunderSection349oftheCompaniesAct,1956(A+B-C) (211,624) (173,553)

InviewofnetlossresultingfromthecomputationunderSection349ofCompaniesAct,1956,nocommissionispayabletotheDirectors.

7. Licensed Capacity, Installed Capacity and Production (in Metric Tonnes)Items # Installed Capacity* Production

Year endedDecember 31,

2011

YearendedDecember31,

2010


2011


2010Sulphuricacid 45,000 45,000 36,934 35,944Linearalkylbenzenesulphonicacid 14,000 14,000 2,519 1,859Surfactants** 24,500 24,500 29,046 30,475* Ascertifiedbythemanagementonwhichtheauditorshaveplacedreliancewithoutverification,beinga

technicalmatter.** InstalledcapacityofSurfactantsisonactivematterbasis.# Aspernotificationno.477(E)datedJuly25,1991issuedbytheMinistryofIndustry,theCompany’sindustrial

undertaking isexempt from the licensingprovisionsof the Industries (DevelopmentandRegulation)Act,1951.Accordingly,therequirementconcerningdisclosureoflicensedcapacityisnotapplicable.

TheproductionfiguresforLinearalkylbenzenesulphonicacidandSurfactantsexcludeprocessingdoneforthirdpartiesof3,013MT(Previousyear1,409MT)and2094MT(PreviousyearNilMT)respectively.

TheproductionfiguresforSurfactantsincludethequantitiesproducedbythirdpartiesof439MT(Previousyear578MT)and969MT(Previousyear959MT)ofproductswhererelabellinghasbeencarriedout.

TheproductionfiguresforSulphuricacidincludequantitiesproducedfromotherplantof585MT(Previousyear642MT)asby-product.


NOTES.indd 40 4/23/2012 5:28:41 PM


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Manufactureditems:

Sulphuricacid

100

476

626

3,12

7 36

,395

17

4,20

6 1

3 (401)

(958)

(100)

(476)

(36,212)

(122,420)

(33)

Linearalkylbenzenesulphonicacid

37

1,86

9 23

4 #

20,5

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2,31

4 19

1,43

8 8

(40)

(3,275)

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(1,857)

(134,651)

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Surfactants

1,98

7 10

4,94

9 1,

969

94,5

73

19,6

99

1,45

0,24

2 9,

365

(1,491)

(49,856)

(1,987)

(104,949)

(19,255)

(1,024,227)

(10,645)

Tradeditems:

Variousproducts

104

2

6,59

1 2

65

106

,397

3

,964

6

57,9

39

–(136)

(22,720)

(104)

(26,591)

(2,101)

(325,309)

(–)

By-products

––

––

–61

–

(–)

(–)

(–)

(–)

(–)

(255)

(–)

To

tal

133,

885

224,

648

2,47

3,88

6 (76,809)

(133,885)

(1,606,862)

FiguresinbracketareforthepreviousyearendedDecember31,2010.

@

Representscaptiveconsum

ptionofgoods.

#QuantityofclosingstockofLinearalkylbenzenesulphonicacidexcludesquantitiesprocessedforthirdpartiesandlyinginstockasat

theyearend.However,thecostofprocessingandexcisedutythereonof`249(‘000){Previousyear`22(‘000)}isincludedinthevalue

ofclosingstock.

@@Theclosingstockstatedaboveareafteradjustmentforwastages,write-offs,excessesetc.Closingstockfigures,ifderivedfrom

opening

stock,productionandsaleswouldbedifferentduetotheseadjustments.

NOTES.indd 41 4/23/2012 5:28:42 PM




Year endedDecember 31, 2011

YearendedDecember31,2010

Quantity MT ` ’000 QuantityMT `’000 9. Purchases of traded items

VariousProducts 4,125 643,770 2,069 264,525

10. Consumption of Raw materialsLaurylAlcoholEthoxylate 4,199 533,601 3,074 280,968LaurylAlcohol 1,399 194,085 1,535 142,577LinearAlkylBenzene 1,792 182,766 1,339 112,600AlfaOlefin 2,083 163,173 2,666 183,746Sulphur 13,740 155,545 13,068 113,462Others 250,999 193,742

1,480,169 1,027,095

% ` ’000 % `’000Raw MaterialsImported 21.67 320,803 25.14 258,209Indigenous 78.33 1,159,366 74.86 768,886

100.00 1,480,169 100.00 1,027,095Note:Forthepurposeofpara4D(c)ofpartIIofScheduleVItotheCompaniesAct,1956,componentsandsparepartsareassumedtomeanthoseincorporatedintheproductsfinallysoldandnotthoseusedassparesfortherepairsandmaintenanceofplantandmachinery.



` ’000 `’00011. CIF Value of Imports

RawMaterials 495,795 383,044TradedGoods 184,579 149,060StoresandSpares 365 3,483

12. Expenditure in Foreign Currency (on payment basis)Travelling 1,136 1,322ExportCommission 112 136 Professional Fees [Tax deducted at source ` Nil,Previousyear:` 4,735(000)]

– 18,016

Trainingmaterial 328 –Otherexpenses(Teleconferencing,misc.purchase) 67 –

13. Earnings in Foreign CurrencyFOBValueofExports 219,272 101,842Indentingcommission 3,543 4,206


NOTES.indd 42 4/23/2012 5:28:42 PM


Schedules forming part of the AccountsSchedule 21Notes to the Accounts (Contd.)

14. ThetaxyearfortheCompanybeingtheyearendingMarch31,2012,theprovisionfortaxationfortheyearistheaggregateoftheprovisionforthethreemonthsendedMarch31,2011,andtheprovisionbasedonthefiguresfortheremainingninemonthsuptoDecember31,2011theultimatetaxliabilityofwhichwillbedeterminedonthebasisofthefiguresfortheperiodApril1,2011toMarch31,2012.Howevernoprovisionfortaxismadeinviewofthelossesincurredduringtheyearaswellasbroughtforwardlossofearlieryears.

15. TheCompanyisengagedonlyinonesegmenti.e.thebusinessofmanufactureofIndustrialChemicalsforthepurposesofAccountingStandard17-“SegmentReporting”.

16. ThespecifieddisclosuresforOperatingLeasesasrequiredbyAccountingStandard19-‘Leases’aregivenbelow:Year ended

December 31, 2011


2010

` ’000 `’000Disclosuresinrespectofagreementforresidentialflats/OfficePremises(alongwithfurniture,fixturesetc.therein)takenonlease:(i) LeasepaymentsrecognisedintheProfitandLossAccountfortheyear 21,860 24,000(ii) Futureminimumleasepaymentsundernon-cancellableoperatinglease: Notlaterthanoneyear 23,602 13,744 Laterthanoneyearbutnotlaterthanfiveyears 35,472 – Laterthanfiveyears – –(iii) Significantleasingarrangements 1. Undertheagreements,refundableinterestfreedeposits/advancerent

havebeengiven. 2. Theagreementscontainprovisionforrenewal. 3. Theperiodofagreementrangesbetween11monthsto36months. 4. Undercertainagreements,theCompanyisentitledtopermitcertain

specifiedpartiestheuseorsharingofthepremises.

17. Related Party Disclosures RelatedPartyDisclosuresinaccordancewiththeAccountingStandard18-‘RelatedPartyDisclosures’aregiven

below: (a) PartieswhereControlexists: RhodiaS.A.,France is theultimateholdingcompany.RhodiaUKLtd.holds72.93%of theequity share

capitalintheCompanyandRhodiaS.A.,Franceistheholdingcompanyofthiscompany. (b) NamesoftherelatedpartieswithwhomtheCompanyhadtransactionsduringtheyear: (i) FellowSubsidiaries: RhodiaInc.USA RhodiaOperationsS.A.S.,France RhodiaNiccaLtd. RhodiaPoliamidaEEspecialidadesLtd.A,Brazil RhodiaPolyamideCo.Ltd.,Korea PTRhodiaManyar Rhodia(ZHENJIANG)ChemicalsCo.Ltd. RhodiaSpecialityChemicalsWuxiCo.Ltd. Rhodia(China)Co.Ltd. RhodiaThaiIndustriesLtd. RhodiaAsiaPacificPte.Ltd.,Singapore RhodiaPolymers&SpecialtiesIndiaPvt.Ltd. RhodiaThaiHoldingsLtd. RhodiaUKLtd. Note:TheabovehavebeenidentifiedonthebasisoftheinformationavailablewiththeCompany. (ii) KeyManagementPersonnel: Mr.LeutnerThomas,ManagingDirector

NOTES.indd 43 4/23/2012 5:28:43 PM




(c) TransactionswiththeRelatedPartiesduringtheyearendedDecember31,2011:Year ended

December 31, 2011


2010

` ‘000 `‘000(i) Fellow Subsidiaries

Salesofgoods RhodiaOperationsS.A.S.,France 91,103 30,547 RhodiaAsiaPacificPteLtd.,Singapore 24,839 18,625 RhodiaInc.USA 47,945 17,136 Rhodia(ZHENJIANG)ChemicalsCo.Ltd. – 1,444 RhodiaPoliamidaEEspecialidadesLtd.A,Brazil 21,487 1,374 PTRhodiaManyar – 1,133 RhodiaSpecialityChemicalsWuxiCo.Ltd. – 1,016 RhodiaNiccaLtd. 118 142 RhodiaUKLtd. 1,756 –

187,248 71,417Purchaseoffinishedgoods RhodiaAsiaPacificPteLtd.,Singapore 120,396 79,779 RhodiaThaiIndustriesLtd. 21,289 28,601 RhodiaSpecialityChemicalsWuxiCo.Ltd. – 9,656 Rhodia(ZHENJIANG)ChemicalsCo.Ltd. 14,577 – RhodiaInc.USA – 108 RhodiaThaiHoldingsLtd. 2,402 –

158,664 118,144Renderingofservices RhodiaPolymers&SpecialtiesIndiaPvt.Ltd. 12,299 – RhodiaAsiaPacificPteLtd.,Singapore 2,529 2,218 RhodiaPolyamideCo.Ltd.,Korea 900 1,800 RhodiaThaiIndustriesLtd 211 786 RhodiaPoliamidaEEspecialidadesLtd.A,Brazil 381 456 RhodiaOperationsS.A.S.,France – 351 RhodiaInc.USA 57 175 RhodiaSpecialityChemicalsWuxiCo.Ltd. – 47 Rhodia(ZHENJIANG)ChemicalsCo.Ltd. 94 5

16,471 5,838Receivingofservices RhodiaAsiaPacificPteLtd.,Singapore – 1,816 Rhodia(China)Co.Ltd. – 903 RhodiaOperationsS.A.S.,France – 88

– 2,807

Expenditureincurredonbehalfoffellowsubsidiary RhodiaOperationsS.A.S.,France – 357 RhodiaPolyamideCo.Ltd.,Korea – 751

– 1,108

NOTES.indd 44 4/23/2012 5:28:44 PM




2011


2010

` ‘000 `‘000(ii) Key Management Personnel

Mr.ThomasLeutner 3,209 3,191

3,209 3,191

(d) BalancesOutstandingasatyearend:AmountPayable:Fellowsubsidiaries RhodiaAsiaPacificPte.Ltd.,Singapore 102,632 32,647 RhodiaThaiIndustriesLtd. 6,081 9,985 Rhodia(ZHENJIANG)ChemicalsCo.Ltd. 2,707 – Rhodia(China)Co.Ltd. – 1,513 RhodiaOperationsS.A.S.,France – 88 RhodiaThaiHoldingsLtd. 2,562 –

113,982 44,233

AmountReceivable:Fellowsubsidiaries RhodiaAsiaPacificPteLtd.,Singapore 3,429 3,217 RhodiaThaiIndustriesLtd. 165 338 RhodiaPoliamidaEEspecialidadesLtd.A,Brazil 7,007 – RhodiaOperationsS.A.S.,France 13,835 5,450 RhodiaInc.USA 9,652 38 Rhodia(ZHENJIANG)ChemicalsCo.Ltd. 117 1,468 RhodiaPolyamideCo.Ltd.,Korea – 883

34,205 11,394

(e) Noamountshavebeenwrittenoff/providedfororwrittenbackinrespectofamountsreceivablefromorpayabletotherelatedparties.

18. Earnings Per ShareUnit Year ended

December 31,2011


2010

(a) Net(Loss)aftertaxationattributabletoequityshareholders `in’000 (56,661) (36,858)

(b) Weightedaveragenumberofequitysharesof` 10eachoutstandingasattheyearend Nos. 3,375,600 3,375,600

(c) Nominalvalueofshare ` 10 10

(d) Earningspershare(basicanddiluted)[a/b] ` (16.79) (10.92)

NOTES.indd 45 4/23/2012 5:28:44 PM




19.DetailsofEmployeeBenefitsasrequiredbytheAccountingStandard15EmployeeBenefitsareasfollows:–

1. DefinedContributionPlansYear ended

December 31,2011


2010

` ‘000 `‘000DuringtheyearendedDecember31,2011,theCompanyhasrecognisedthefollowingamountsintheProfitandLossAccount:– Employers’contributiontoProvidentFundandFamilyPension

Fund4,209 3,892

– Employers’contributiontoSuperannuationFund 1,879 1,896Theaboveamountsareincludedin‘Contributiontoprovident,gratuityandotherfunds’under‘PersonnelCost’inSchedule18.

2. DefinedBenefitPlan(Funded) (a) AgeneraldescriptionoftheEmployeesBenefitPlan: TheCompanyhasanobligation towardsgratuity, a fundeddefinedbenefit retirementplancovering

eligibleemployees.Theplanprovidesforlumpsumpaymenttovestedemployeesatretirement,deathwhileinemploymentoronterminationoftheemployment.Incaseofvestednonmanagementstaff,gratuityiscalculatedinaccordancewiththeprovisionsofthePaymentofGratuityAct,1972.Further,in case of retirement or superannuation after the completionof more than20 years of service,additionalgratuityof20%oftheamountofthegratuitycalculatedinaccordancewiththeprovisionsof thePaymentof GratuityAct,1972 isalsopayable. Incaseofvestedmanagement staff,gratuitybenefitisanamountequivalentto15/30dayssalarydependinguponthetermsofappointmentforeachcompletedyearofservicesubjecttoamaximumof30monthssalary.Vestingoccursuponthecompletionoffiveyearsofservice.

(b) Detailsofdefinedbenefitplan-AsperActuarialValuation

Gratuity Year endedDecember 31,

2011


2010

` ’000 `’000

Particulars

I. Components of employer expense

1. CurrentServicecost 1,859 1,089

2. InterestCost 1,575 1,025

3. ExpectedreturnonPlanAssets (1,299) (843)

4. ActuarialLosses/(Gains) (781) 1,159

5. PastServicecost – 4,250

6. Total expense recognised in the Profit and Loss Account (included in ‘Contribution to provident, gratuity and otherfunds’under‘PersonnelCost’inSchedule18) 1,354 6,680

NOTES.indd 46 4/23/2012 5:28:45 PM




2011


2010

` ’000 `’000

II. ActualContributionandBenefitsPaymentsfortheyear

1. ActualBenefitsPayments (799) (1,269)

2. ActualContributions 4,743 5,957

III. Net asset/(liability) recognised in the Balance Sheet

1. PresentValueofDefinedBenefitObligation 22,615 20,507

2. FairValueofPlanAssets 19,993 14,496

3. FundedStatus[Surplus/(Deficit)] (2,622) (6,011)

4. Net (liability)/asset recognised in the Balance Sheet (2,622) (6,011)

IV. ChangeinDefinedBenefitObligationduringtheyear

1. Present value of Defined Benefit Obligation as at January01

20,507 14,108

2. CurrentServiceCost 1,859 1,090

3. InterestCost 1,575 1,025

4. ActuarialLosses/(Gains) (527) 1,303

5. Benefitspaid (799) (1,269)

6. PastServicecost – 4,250

7. Present value of Defined Benefit Obligations as at December 31 22,615 20,507

V. Change in Fair Value of Plan Assets during the year

1. PlanAssetsasatJanuary01 14,496 8,821

2. ExpectedreturnonPlanAssets 1,299 844

3. ActuarialGains/(Losses) 254 143

4. ActualCompanyContributions 4,743 5,957

5. Benefitspaid (799) (1,269)

6. Plan Assets as at December 31 19,993 14,496

NOTES.indd 47 4/23/2012 5:28:46 PM





2011


2010

` ’000 `’000VI. Actuarial Assumptions

1. DiscountRate 8.70% 8.10%

2. ExpectedReturnonplanassets 9.00% 9.00%

3. SalaryEscalationRate 7.50% 7.50%

VII. Theexpectedrateofreturnontheplanassetisbasedontheaveragelongtermrateofreturnexpectedoninvestmentsof theFundduringtheestimatedtermof theobligations.Theactualreturnonplanassetis` 1,553(‘000)[Previousyear`986(‘000)].

VIII. Theassumptionofthefuturesalaryincreases,consideredinactuarialvaluation,takesintoaccounttheinflation,seniority,promotionandotherrelevantfactors.

IX. The major categories of Plan Assets as a percentage of the total plan assetsInsurerManagedFunds 100% 100%

X. Experience Adjustments


2011


2010


2009


2008

` ‘000 `‘000 ` ‘000 `‘000

1. PresentvalueofDefinedBenefitObligationasatDecember31 22,615 20,507 14,108 34,980

2. FairValueofPlanAssetsasatDecember31 19,993 14,496 8,821 30,200

3. FundedStatus[Surplus/(Deficit)] (2,622) (6,011) (5,287) (4,780)

4. ExperienceadjustmentonPlanLiabilities 421 2,314 (1,772) 1,049

5. ExperienceadjustmentonPlanAssets 254 143 117 40

20. (a) ExcisedutypaidandcollectedfromcustomersisshownseparatelyanddeductedfromtheGrosssalesandProcessingchargesintheProfitandLossAccount.

(b) Excise duty appearing under Other expenses (Schedule 19) represents (i) the difference between the exciseduty included in the closing stock and that in theopening stockofmanufacturedfinishedgoods ` 1,872 (‘000) (Debit) [PreviousYear:` 6,926 (‘000) (Debit)] and (ii) the excisedutyon rejections, etc. ` 2,711(‘000)(Debit)[PreviousYear:` 803(‘000)(Credit)].

NOTES.indd 48 4/23/2012 5:28:46 PM



21. ForeignCurrencyexposures:

(a) HedgedExposures

TheCompanyusesforwardexchangecontractstohedgeagainstitsforeigncurrencyexposuresrelatingtotheunderlyingtransactions.Theforwardexchangecontractsoutstandingasat31Decemberareasunder:

Particulars AmountinForeignCurrency

EquivalentAmountin

IndianCurrency (`’000)

BuyersCredit USD 1,972,386 93,446 (3,288,648) (153,235)

Euro 256,703 17,701 (–) (–)

Unamortised premium on forward contracts to be recognised in future period amounts to ` 897 (‘000)[Previousyear`1,398(‘000)].

(b) UnhedgedExposures

Particulars AmountinForeignCurrency

EquivalentAmountin

IndianCurrency (`’000)

Creditors USD 5,552,090 296,325 (3,774,753) (170,335)

Euro 444,430 30,799 (92,856) (5,591)

Buyers’credit Euro 394,172 27,316 (–) (–)

Debtors USD 857,762 45,358 (417,613) (18,651)

Euro 7,717 526 (9,168) (542)

Note:Thefiguresinbracketsrepresentpreviousyear’sfigures.

22. Discontinuing Operation InviewoftheoperationofthePhosphateBusinessbecomingcommerciallyunviable,theCompanyhassuspended

itsoperationsofAmbarnathunitfromJuly2008. TheinformationrelatingtodiscontinuingoperationasrequiredunderAccountingStandard24(AS24)Discontinuing

Operationsisgivenhereunder: (a) Theinitialdisclosureeventforthediscontinuingoperation,asdefinedinAccountingStandard24(AS24)

“DiscontinuingOperations”occurredduring2007. (b) AsatDecember31,2011,thecarryingamountof(i)thetotalassetstobedisposedofwas`22,524(’000)

{Previousyear` 31,969(’000)}and(ii)thetotalliabilitiestobesettledwas` 44,977(’000){Previousyear ` 47,843(’000)}.Thecarryingvalueoffixedassetsheldfordisposalincludedintotalassetswas` 2,978(‘000)[Previousyear` 4,213(’000)].

NOTES.indd 49 4/23/2012 5:28:46 PM




(c) Therevenueandexpensesinrespectof theordinaryactivitiesattributabletothediscontinuingoperationduringtheyearendedDecember31,2011:



` ’000 ` ’000 `’000 `’000IncomeNetSales – 431OtherIncome 1,889 29,182

1,889 29,613ExpenditureMaterials cost {after adjustment for(increase)/ decrease in stock of finishedgoodsandwork-in-progress}

– 153

Personnelcost 1,754 2,134Otherexpenses 10,696 3,161Depreciation 730 4,350

13,180 9,798

(Loss)/Profitbeforetaxation (11,291) 19,815Provisionfortaxation – –

(Loss)/Profitaftertaxation (11,291) 19,815

Note: OtherincomecomprisesofprofitonsaleoffixedassetsatAmbarnath̀ 331(000){Previousyear̀ 24,700(000)}

andscrapsalesof`1,558(000){Previousyear` 4,482(000)}.Materialcostisafteradjustingcostofsemifinishedgoodsbasedonexcisedeclaredpricetransferredfrom/tocontinuingoperation.

(d) The amounts of net cash flows attributable to the operating, investing and financing activities of thediscontinuingoperationfortheyearendedDecember31,2011:


2011


2010

` ’000 `’000(i) Netcashfrom/(usedin)operatingactivities (7,261) (1,021)(ii) Netcashfrom/(usedin)investingactivities 11,683 34,825(iii)Netcashfrom/(usedin)financingactivities – –


ForandonbehalfoftheBoardofDirectorsFor B S R & Co. S. N. Talwar Yogesh TharChartered Accountants Chairman DirectorFirm’sRegistrationNo.:101248W

Sanjay Aggarwal Thomas Leutner Niranjan KetkarPartner Managing Director Legal Manager &MembershipNo.:40780 Company Secretary


Mumbai:24thFebruary,2012 Mumbai:24thFebruary,2012

NOTES.indd 50 4/23/2012 5:28:47 PM


Balance Sheet Abstract and Company’s General Business ProfileI. Registration Details Registration No. 1 3 3 3 1 State Code 1 1

Balance Sheet Date 3 1 . 1 2 . 1 1 Date Month Year

II. Capital raised during the year (Amount in ` Thousands)

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement N I L

III. Position of Mobilisation and Deployment of Funds (Amount in ` Thousands)

Total Liabilities 8 9 4 5 9 2 Total Assets 8 9 4 5 9 2 Sources of Funds Paid-up Capital 3 3 7 5 6 Reserves & Surplus 3 5 4 8 6 4

Secured Loans 1 5 5 9 7 2 Unsecured Loans 3 5 0 0 0 0

Deferred Tax Liability N I L

Application of Funds

Net Fixed Assets 5 5 3 8 3 8 Investments 3

Deferred Tax Asset N I L Net Current Assets 3 4 0 7 5 1

Misc. Expenditure N I L Accumulated Losses N I L

IV. Performance of Company (Amount in ` Thousands)

Turnover* 2 5 4 5 5 5 5 Total Expenditure 2 6 0 2 2 1 6

Loss before tax 5 6 6 6 1 Loss after tax 5 6 6 6 1

Earning per Share in ` – 1 6 . 7 9 Dividend rate % –

* Including Processing Charges and Other Income

V. Generic Names of Three Principal Products/Services of Company (as per monetary terms)

Item Code No. (ITC Code) 3 4 0 2 1 3 0 0

Product Description S O D I U M L A U R Y L E T H E R

S U L P H A T E


Product Description A L P H A O L E F I N

S U L P H O N A T E


Product Description S O D I U M L A U R Y L

S U L P H A T E

For and on behalf of the Board of Directors

S. N. Talwar Yogesh TharChairman Director

Thomas Leutner Niranjan KetkarManaging Director Legal Manager &

Company SecretaryRajiv MehtaGeneral Manager – Finance

Mumbai: 24th February, 2012


Abstract-Cash Flow.indd 51 23/04/2012 5:27:53 PM

Notes

Abstract-Cash Flow.indd 52 23/04/2012 5:27:53 PM

BOARD OF DIRECTORS

Mr. D. D. ChopraChairman Emeritus

Mr. IaN BroWN

Mr. SUrESh TaLWarChairman

Mr. raNJIT paNDIT

Mr. ChEN pU

Mr. YogESh Thar

Mr. MIChEL YBErT

Mr. ThoMaS LEUTNErManaging Director

MS. QUITTErIE DUpoNTrEUE-DE-pELLEporT

THE LAST TEN YEARS

(` Lakhs)

2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Share Capital 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56 337.56

reserves & Surplus 3548.64 4115.25 4483.83 6541.04 5225.46 5731.36 5706.45 5036.92 4654.94 4255.71

Shareholders Fund 3886.20 4452.81 4821.39 6878.60 5563.02 6068.92 6044.01 5374.48 4992.50 4593.27

Debt 5059.72 4271.04 3073.16 100.00 0 407.01 0 488.11 417.03 343.81

Debt Equity ratio 1.30 0.96 0.64 0.01 0 0.07 0 0.09 0.08 0.07

Net Fixed assets 5332.23 5912.98 6595.44 963.87 1143.49 1289.93 1339.91 1356.31 1565.57 1620.76

Investment 0.03 0.03 0.03 0.03 84.53 84.53 84.53 84.53 84.53 84.15

Net Current assets 3407.51 2788.14 1293.39 1046.54 2571.75 4728.29 4492.32 4288.93 3679.95 3091.23

Net Turnover 25078.44 16108.90 9512.96 12866.20 12843.31 14008.26 14016.63 13333.83 10938.10 9607.12

profit/(Loss) Before Tax (566.61) (368.58) (2304.21) 1962.12 (365.66) 21.39 1301.03 938.83 741.57 952.62

profit/(Loss) after Tax (566.61) (368.58) (2057.21) 1374.82 (445.35) 24.81 881.23 574.43 494.43 649.98

Dividend 0 0 0 50.63 33.76 0 185.65 168.78 84.39 84.39

Tax on Dividend 0 0 0 8.61 5.73 0 26.04 23.67 10.81 10.81

retained Earnings 0 0 0 1315.58 0 24.81 669.53 381.98 399.23 559.94

Earnings per Share (`) (16.79) (10.92) (60.94) 40.73 (12.79) 0.09 26.11 17.02 14.65 19.26

Dividend per Share (`) 0 0 0 1.50 1.00 0 5.50 5.00 2.50 2.50

Book Value per Share (`) 115.13 131.91 142.83 203.77 164.80 179.79 179.05 159.22 147.90 136.07

Mr. SaNJEEV MUKErJEE

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