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Annual Report 2009Clariant Chemicals (India) Limited

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www.clariant.in

Clariant Chemicals (India) LimitedRavindra Annexe194 Churchgate ReclamationMumbai 400 020

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We enhance the quality of your life!

Clariant’s products span across a wide spectrum of applications. You could find us in the most unexpected areas, right from the wrinkle free fabric, to the scratch free automotive coatings, in the special pharma and plastic packaging, on the leather sofas or in the heavy metal free paints. Our initiatives on quality, creating a broad range of green products, work place ethics and safety help strengthen our partnership with all of our stakeholders upon whom our success depends. Ultimately we strive to provide sustainable partnerships and make our world a better place!

Clariant Chemicals (India) LimitedAnnual Report 2009


2 Corporate Management

7 Financial Performance

9 Notice

13 Directors’ Report

17 Management Discussion and Analysis

22 Report on Corporate Governance

31 Auditors’ Report

34 Balance Sheet

35 Profit and Loss Account

36 Cash Flow Statement

38 Schedules to Balance Sheet

44 Schedules to Profit and Loss Account

46 Notes

58 Statement relating to the Subsidiary Company

59 Chemtreat Composites India Private Limited (Subsidiary)

67 Auditors’ Report on Consolidated Financial Statements

68 Consolidated Financial Statements

88 10-years’ Highlights

Index

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2 Clariant Chemicals (India) Limited2 Clariant Chemicals (India) LimitedAnnual Report 2009

Corporate Management

Peter Palm R.A. Shah Diwan A. Nanda

Bansi S. Mehta Henri Schloemer B.L. Gaggar Heiner Meier


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BOARD OF DIRECTORSR.A. Shah – ChairmanPeter Palm – Vice-Chairman & Managing DirectorBansi S. MehtaDiwan A. NandaHeiner MeierHenri SchloemerDr. Andreas Walde

B.L. Gaggar – Director Finance & Company Secretary

AUDIT COMMITTEER.A. Shah, ChairmanDiwan A. NandaHenri Schloemer

INVESTORS’ GRIEVANCE COMMITTEEDiwan A. Nanda, ChairmanPeter Palm

AUDITORSDeloitte Haskins & SellsChartered Accountants

BANKERSThe Hongkong & Shanghai Banking Corpn. Ltd.

Standard Chartered Bank

Citibank N.A.

SOLICITORS & ADVOCATESCrawford Bayley & Co.

REGISTRAR & SHARE TRANSFER AGENTSSharepro Services (India) Pvt. Ltd.Sakinaka, Andheri (E)Mumbai – 400 072

REGISTERED OFFICERavindra Annexe194, Churchgate ReclamationMumbai – 400 020

WORKSDhatav, Roha, Dist. Raigad – 402 116Balkum, Thane – 400 608Kolshet Road, Thane – 400 607Kudikadu, SIPCOT P. O., Cuddalore – 607 005Singadivakkam Village, Kanchipuram – 631 561

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4 Clariant Chemicals (India) LimitedAnnual Report 2009

Exacting Solutions …Clariant’s customers span across a wide range of businesses that are the market leaders in their own ways. Our diversity highlights our varied expertise and domain knowledge available for meeting the specialized demands of the industry.

Clariant’s textiles business, a respected market leader in India, supplies not just specialty chemicals for pretreatment, dyeing, printing and finishing but also has the ability to impart special effects, from crease resistance to moisture management as well as repellency. We cater to varied segments like casual wear, sportswear, denim, business wear, work wear, towels, upholstery, sarees and dress materials, medical garments, textiles for cars, planes, trains and carpets.

Clariant is the leading manufacturer and supplier of pigments and its preparations – be it for paints, plastics, printing inks, cosmetics, detergents or special applications like latex, viscose or waxes. Our high performance pigments meet the exacting demands of the

automotive, coil and coating industries. The halogen-free flame retardants from the additives range are used for protective coatings, resins, thermoplastics and polyester fibers.

Our paper specialties business is the preferred supplier of optical brighteners, colorants and functional chemicals that impart superior whiteness, color, coating and strength solutions for the paper market. Our focused product range enhances both optical and functional properties of all kinds of paper and board. We cater to segments like: printing & writing, coated paper, tissue & toweling, packaging & board, newsprint, among others.

Clariant is a leading supplier of leather chemicals and services in India, offering chemical and technical solutions for the complete leather manufacturing process, from beamhouse to finishing. We meet the exacting demands of segments like automotive, shoe & fancy goods, furniture, garment, fur, etc.


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Our emulsions business is a major supplier of polymer dispersions to paints, coatings, construction and adhesive industries. In water-based wood coatings, the products have low VOC, no smell and quick drying, thereby meeting the local demands of the industry. They also provide good block resistance with enhanced gloss on wood and metals.

Clariant masterbatches has been recognized as an important specialty and tailor made masterbatch supplier for the plastics industry. We meet the exacting demands in many application areas like: automotive, personal care, food & beverage, medical products, toys, fibers & filaments, packaging film & sheet, agriculture applications, etc.

One of Clariant’s unique area of expertise is the high quality multi-functional anti-graffiti coatings which are also corrosion resistant and easy to clean. These find wide applications on the exteriors of railway coaches, automobile bodies, etc.

The industrial & consumer specialties business is a global leader. Its personal care business develops and produces specialty ingredients and co-surfactants for skin and hair care, wet wipes and selected pharmaceutical applications. The industrial and home care business manufactures products for household cleaning fluids and disinfectant applications. Our emulsifiers, lubricants and corrosion inhibitors offer solutions for the lubricant and metal working fluid applications, while our brake fluids meet the automotive industry’s demand. Our industrial biocides are technology leaders in the coating segment. We work closely with our customers - both multinational brands and regional brands - to ensure performance, cost-efficiency and eco-friendliness.

Delivering personalized and high performance solutions through close customer relationships which add value for our customers is our hallmark.


Our basket of innovative products aim at ensuring our contribution to the broader sustainable development of the world we live in.

Eco-friendly solutions are integral to our pigment range – be it the lead/chrome/heavy metal free pigments for paints or the flame retardants that are increasingly finding usage in varied applications, especially in the infrastructure sector in India. Our solutions also help conserve energy, avoid excess usage and are VOC free. Our water-based emulsions are another example.

Clariant’s textile chemicals, especially for baby-wear, shirtings, bed-sheets, denims and trouser fabrics are compliant to global norms like Oekotex, GOTS, EU legislations, etc. The 4E concept focuses on environment, efficiency, ecology and economy. The multi-functional anti-graffiti coatings feature eco-friendly/energy savings and include non-fluorine compounds in formulations. Our specialized paper chemicals are well-suited for manufacture of recycled paper as. The leather product range provides environment-friendly value-added solutions for the specific needs of the industry.

Clariant’s skin care formulations are based on raw materials from renewable resources; recycling concepts are used for aviation de-icing products, which are promoted under our ECOTAIN label. Surfactant chemistry based on ethoxylates and specialty polyglycols offer state-of-the-art solutions for the current demands of the Indian market; e.g. VOC-free, low odour and APEO-free paint additives as well as formaldehyde free preservatives. Our green preservative combined with our state-of-the-art manufacturing facility and an elaborate technical service offers the perfect combination of product and service that enables our customers achieve exacting solutions for a better tomorrow!

6 Clariant Chemicals (India) LimitedAnnual Report 2009

… for a better tomorrow!


7

Distribution of Revenue 2009(Rs. Million)

Profit after tax1081 (12%)

Taxes 550 (6%)

Cost of material5452 (59%)

Exceptional items245 (3%)

Other expenses1066 (11%)

Depreciation /Impairment203 (2%)

Personnel cost616 (7%)

0

9

18

27

36

45

EPS, DPS and Payout

82.8

170.8

98.187.8

72.1

* Annualised ** Including Golden Jubilee Dividend of Rs 10

EPS DPS Payout(Earning per share) (Dividend per share) (Including Dividend Tax)

(Rup

ees)

(%)

0

35

70

105

140

175

FY 2008FY 2007 FY 2009April’06 -December’06

April’05 -March’06

15.2

11.0

16.4 *18.0 **

10.0

19.0

11.9

25.3

40.6

25.0

PAT Margin %

PAT and Margin(R

s. M

illio

n)

(%)

0

200

400

600

800

1000

1200

0

4

8

12

16

20

24

4.8 4.8

7.4

11.7

3.7

FY 2008 FY 2009FY 2007April’06 -December’06


404

318

675

1081

329



PBT Margin %

PBT and Margin

(Rs.

Mill

ion)

(%)

0

300

600

900

1200

1500

1800

0

5

10

15

20

25

30

7.6 7.45.7

11.7

17.7

648

508 493

1073

1631

Financial Performance


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Capital Employed ROCE

Capital employed and ROCE

(Rs.

Mill

ion)

(%)

0

700

1400

2100

2800

3500

4200

0

8

16

24

32

40

48

10.4

13.8*

10.1

21.0

30.9

3880

3165 3135 3207

3498

* Annualised


NWC As % of Sales

Net Working Capital to Sales

(Rs.

Mill

ion)

(%)

0

250

500

750

1000

1250

0

4

8

12

16

20

14.1

1199

12.3*13.5

11.0

7.6

11281165

1008

699



* Annualised

Inventory As % of Sales

Inventory to Sales

(Rs.

Mill

ion)

(%)

0

250

500

750

1000

1250

1500

0

4

8

12

16

20

24



14.814.0 *

13.1

11.5

8.3

1253 1282

11271054

767

* Annualised

Receivable As % of Sales

Receivable to Sales



(Rs.

Mill

ion)

(%)

0

300

600

900

1200

1500

1800

0

4

8

12

16

20

24

1451

17.1

15.0* 15.7

16.4

14.4

1374 14131321

1446

* Annualised


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NoticeNOTICE is hereby given that the Fifty-third Annual General Meeting of the Members of Clariant Chemicals (India) Limited will be held at Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai-400 021, on Friday, April 23, 2010 at 04.00 p.m. to transact the following business:

Ordinary Business:1. To consider and adopt the audited Balance Sheet as at

December 31, 2009 and the Profit and Loss Account for the year ended on that date and the Reports of the Directors and Auditors thereon.

2. To confirm the declaration and payment of interim dividend and to declare a final dividend for the year ended December 31, 2009.

3. To appoint a director in place of Diwan A. Nanda, who retires by rotation and being eligible, offers himself for re-appointment.

4. To appoint the auditors and fix their remuneration.

Special Business:5. To consider and, if thought fit, to pass, with or without

modification, the following resolution as an Ordinary Resolution:

"RESOLVED THAT in accordance with the provisions of Section 257 of the Companies Act, 1956, Mr. Henri Schloemer, who was appointed as an Additional Director pursuant to the provisions of Section 260 of the Companies Act, 1956 and Article 113 of the Articles of Association of the Company with effect from January 1, 2010 and being eligible, offers himself for re-appointment and in respect of whom the Company has received notice in writing along with the prescribed deposit, from a shareholder signifying his intention to propose him as a candidate for the office of Director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”

6. To consider and if thought fit, to pass with or without modification, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310 read with Schedule XIII and all other applicable provisions, if any, of the Companies Act, 1956, approval of members be and is hereby accorded to the appointment of Mr. Peter Palm as Vice-Chairman & Managing Director of the Company for a period of three years with effect from January 1, 2010 upon the

terms and conditions including remuneration, benefits and perquisites payable or extended to him as set out in the agreement executed between the Company and Mr. Palm and provided in explanatory statement annexed to the Notice convening this meeting.

RESOLVED FURTHER THAT Mr. Palm be paid a one time lump sum compensation not exceeding Rs. 10 lakhs subject to the deduction of tax, as relocation allowance and to reimburse actual expenses incurred for shifting of his personal effects from Leeds, UK to Mumbai, India.

RESOLVED FURTHER THAT in the event of any statutory amendment, modification or relaxation by the Central Government to Schedule XIII to the Companies Act, 1956, the Board of Directors of the Company (hereinafter referred to as ‘the Board’ which term shall be deemed to include any Committee which the Board may constitute to exercise its powers, including powers conferred by this resolution) be and is hereby authorised to vary and/or increase the remuneration including salary, commission, perquisites, allowances, etc., within such prescribed limit(s) or ceiling and the agreement between the Company and the Vice-Chairman & Managing Director be suitably amended to give effect to such modification, relaxation or variation without any further reference to the members of the Company in General Meeting.

RESOLVED FURTHER THAT, Mr. Palm shall not be subject to retirement by rotation as per Article 127 of the Articles of Association of the Company during his tenure as Vice-Chairman & Managing Director.

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, any Director and the Company Secretary of the Company be and are hereby authorised to further execute the necessary documents under the Common Seal of the Company.

7. To consider and, if thought fit, to pass, with or without modification, the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 293(1)(a) and other applicable provisions, if any, of the Companies Act, 1956, (including any statutory modifications or re-enactment thereof) and subject to the consent, approval, and permission being obtained from appropriate authorities to the extent applicable and necessary, consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as the ‘Board’ which shall

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10 Clariant Chemicals (India) Limited Annual Report 2009

be deemed to include any committee thereof) to sell, transfer and/or otherwise dispose off whole or substantially whole of the Company’s assets consisting of property/land/undertaking at the Balkum, Thane site of the Company with or without the buildings, plant and machinery, equipment, furniture and fixtures, infrastructure, facilities, auxiliaries, utilities attached thereto the land, intellectual property rights, resources, advantages, privileges, easement, benefits, exemptions, rights, lease, tenancy, licenses, consents etc. in respect of the said land and other assets attached or any part of it; to such person(s) or entities at a price and on such terms and conditions, as may be deemed fit by the Board in the best interest of the Company.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised and empowered to finalise and execute necessary documents including agreements, deeds of assignment/conveyance and other documents and to do all such other acts, deeds, matters and things as may be deemed necessary and expedient in their discretion for completion of transfer/sale/lease or otherwise dispose off the said property, land and undertaking and to give effect to this resolution.

RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to delegate all or any of the powers herein conferred in such manner as may be deemed fit”.

8. To consider and, if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to Section 146 (2) of the Companies Act, 1956 the registered office of the company be shifted from Ravindra Annexe, 194 Churchgate Reclamation, Mumbai-400 020 to Kolshet Road P.O. Sandoz Baug Thane 400 607 within the state of Maharashtra.

RESOLVED FURTHER that for the purpose of giving effect to this resolution, the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, matters and things and to execute all such deeds, documents, instruments and writings and in its absolute discretion necessary or desirable or in the best interests of the Company.

RESOLVED FURTHER that Mr. B. L. Gaggar, Director Finance & Company Secretary be authorized to notify the said change in the situation of the Registered Office of the Company to the Registrar of Companies, Maharashtra”.

By Order of the Board of DirectorsFor Clariant Chemicals (India) Limited

B. L. GaggarDirector Finance & Company Secretary

February 19, 2010.

Registered Office:Ravindra Annexe,194, Churchgate Reclamation,Mumbai-400 020

NOTES:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE

MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.

Proxy form in order to be effective must be received at the registered office of the Company not less than 48 hours before the meeting.

2. The relevant Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 in respect of the special business under Item Nos. 5 to 8 set out above is hereto annexed.

3. The Register of Members and Share Transfer Books of the Company will remain closed from Tuesday, April 13, 2010 to Friday, April 23, 2010 both days inclusive, for the purpose of payment of final dividend, if declared at the Annual General Meeting.

4. The final dividend on shares as recommended by the Board of Directors, if declared at the meeting, will be paid:

(i) in respect of shares held in demat form on the basis of beneficial ownership as per details furnished by the Depositories as at the end of the business on April 12, 2010 and

(ii) in respect of shares held in physical form to those members whose names appear on the Register of Members of the Company after giving effect to all valid share transfers lodged with the Share Transfer Agent on or before April 12, 2010. The Company will dispatch the dividend warrants on or after April 24, 2010.

5. Profiles of the Directors being re-appointed, as required under clause 49 of the Listing Agreement, are provided in the report on Compliance of Corporate Governance.

6. The amount outstanding in unpaid dividend account in respect of financial year 2002-2003 will be transferred to the ‘Investor Education and Protection Fund’ maintained with the Central Government after the end of 7 (seven) years after July 23, 2010. Members who have still not encashed their dividend are requested to encash the same at the earliest.

7. In case of any change of particulars including address, bank mandate & nomination for shares held in demat form, should be notified only to the respective Depository Participants where the member has opened his demat account. The Company or its Share Transfer Agent will not be able to act on any direct request from these Members for change of such details. However, any change in particulars in respect of shares held in physical form, should be sent to the Registrars & Share Transfer Agents of the Company.

8. Members holding shares in demat form may please note that the bank account details given by them to their Depository Participants (DPs) and passed on to the Company by such DPs would be printed on the dividend warrants of the concerned members. However, if any member(s) wants to receive dividend in any other bank account, he/she should change/ correct the bank account details with their concerned DPs and also intimate about ECS payment requirement. The Company

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11Notice

will not be able to act on any such request from shareholders directly for deletion/change in the bank account details.

9. Members may please note that the Dividend Warrants are payable at par at all the clearing branches of the HDFC Bank Limited in India for an initial period of three months only. Thereafter, the Dividend Warrant is payable only on revalidation for a further period of three months. The members are therefore, advised to encash Dividend Warrants within the initial validity period.

10. Members who wish to attend the meeting are requested to bring attendance slip sent herewith, duly filled in, and the copy of the Annual Report. Copies of the Annual Report will not be distributed at the meeting.

ANNEXURE TO THE NOTICE Explanatory Statement under Section 173 of the Companies Act, 1956

Item No. 5At the meeting of the Board of Directors (“the Board”) of the Company held on October 29, 2009 the Board appointed Mr. Henri Schloemer as an additional director of the Company with effect from January 1, 2010 pursuant to Section 260 of the Companies Act, 1956, read with Article 113 of the Articles of Association of the Company, Mr. Schloemer holds office only up to the date of the forthcoming Annual General Meeting.

Notice in writing has been received from a member of the Company along with the prescribed deposit under Section 257 of the Companies Act, 1956, signifying his intention to propose Mr. Henri Schloemer as a candidate for the office of Director.

The Directors recommend the Resolution for Member’s approval.

No Director other than Mr. Henri Schloemer is concerned/interested in this resolution.

Item No. 6Mr. Peter Palm was appointed by the Board, as the Vice-Chairman & Managing Director of the Company, for a period of three years, with effect from January 1, 2010 on the remuneration, terms and conditions subject to the approval of members.

The Directors recommend the approval of the special resolution concerning the appointment of Mr. Palm. None of the Directors, other than Mr. Palm, is concerned or interested in the resolution.

The information in respect of the terms of remuneration and perquisites is given below:

Remuneration, benefits and perquisites

i. Salary: Rs. 7,88,000/- (Rupees seven lakhs eighty eight thousands

only) per month, which may be increased by the Board of Directors from time to time, subject to a maximum salary of Rs. 9,45,000/- (Rupees nine lakhs forty five thousands only) per month. Salary will be subject to the deduction of Income tax at the applicable rates, under the Income Tax Act, 1961.

ii. Contribution to PF: Contribution to Provident Fund at the rate specified in the

Provident Fund Act and Rules thereunder calculated on salary payable per month.

iii. Commission: Subject to the overall ceilings laid down under Sections

198 and 309 of the Companies Act, 1956, a fixed sum in the range of Rs. 21,00,000/- (Rupees twenty-one lakhs only) to Rs. 30,00,000/- (Rupees thirty lakhs only) per annum, as may be decided by the Board from year to year.

iv. Perquisites a) Housing: Suitable residential accommodation, free of cost with

all facilities, amenities and services (including gas, electricity, water and furnishings). In case Mr. Palm does not opt for Company provided accommodation at any time, he shall be reimbursed the house rent allowance of a sum not exceeding 70% of his salary. The expenditure incurred by the Company on gas, electricity, water and furnishings provided to him shall be evaluated as per the Income Tax Rules, 1962.

b) Medical Reimbursement: Reimbursement of medical expenses incurred by

Mr. Palm for self and family, in accordance with the rules and regulations of the Company as may be in force from time to time.

c) Leave and Leave Travel Concession: Leave period of six weeks on full pay and allowances,

for every twelve months of service subject to the condition that the accumulated leave shall not be encashed. The Company will bear the full cost of leave passage for Mr. Palm and his family once in a year to any destination in India. In case it is proposed that the leave be spent abroad, the Company will bear the full cost of air passage by club class for Mr. Palm and his family once in a year not exceeding the cost of return passage to his home country.

d) Club Fees: Mr. Palm shall be entitled to the reimbursement of

fees of any two clubs in India, including admission or entrance fees and monthly or annual subscriptions.

e) Personal Accident Insurance: The Company shall pay an annual premium of a sum

not exceeding Rs.15,000/- towards personal accident insurance policy of Mr. Palm.

f) Reimbursement of expenses for returning to home country:

Mr. Palm will be entitled to reimbursement of expenses incurred by him for self and family for returning to his home country after completion of his tenure of office including actual expenses incurred on travel and on

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packing, forwarding, loading/unloading as well as freight, insurance etc. in connection with the moving of his personal effects.

g) Car, Driver & Telephone: The Company will provide Mr. Palm a car and driver

and telephone at his residence for use on Company’s business. Use of car for private purposes and personal long distance calls on telephone shall be billed by the Company to Mr. Palm.

In case the Company is not able to provide a driver to Mr. Palm, the expenses for engaging a driver will be reimbursed to him as per the Company’s rules.

h) Entertainment Expenses: The Company shall reimburse entertainment expenses

actually and properly incurred by Mr. Palm in the course of the business of the Company subject to such annual limits as may be fixed by the Board of Directors of the Company.

v) Limits on Remuneration: The remuneration as specified in clauses above shall be

subject to the overall limits as specified under Sections 198, 269, 309 and other applicable provisions read with Schedule XIII of the Companies Act, 1956.

vi) Minimum Remuneration: In the event of the Company incurring a loss or having

inadequate profits in any financial year, the remuneration, benefits and perquisites payable or extended to Mr. Palm shall be in accordance with the provisions of Section II of Part II of Schedule XIII to the Companies Act, 1956 as amended from time to time.

vii) Termination: This agreement may be terminated by either party by giving to

the other party six months’ notice of such termination.

viii) Vacation of Office: If at any time during the tenure of his appointment as the

Vice-Chairman & Managing Director, Mr. Palm ceases to be in the whole time employment of the Company for any reason whatsoever, he shall also cease to be a Director of the Company and simultaneously this agreement shall stand terminated.

ix) Sitting Fees: Mr. Palm shall not be paid sitting fees for attending the

meetings of the Board of Directors of the Company.

Mr. Palm is not liable to retire by rotation during his tenure as Vice-Chairman and Managing Director.

Item No. 7Sale of Land/Premises at Balkum

In terms of Section 293(1) (a) of the Companies Act, 1956 sale, lease or otherwise disposal of the whole, or substantially the whole of

undertaking of the Company, or where the Company owns more than one undertaking, of the whole or substantially the whole of any such undertaking requires approval of the shareholders by way of an Ordinary Resolution. The Company is holding about 36 acres of land at Balkum, Thane and after completion of sale of Diketene and Intermediates business together with its movable assets in terms of Business Transfer Agreement, in January 2010, the site is currently used for manufacturing operations of Phthalo Green pigments and various site offices and laboratory set-up. The location earlier approved for use by chemical industry by the Govt. of Maharashtra, is currently surrounded by residential buildings. It is, therefore felt that considering the Company’s commitment to environment, safety and health of its people and society at large, the site is not fit for continuing the operations as chemical factory and the potential of the premises/land at site can be better realised for use by other commercial/residential purposes. Since development of infrastructure is not the core of the Company’s business, the Board considered and thought it fit and proper that after closure, divestment or sale of its existing business operations from Balkum site and subject to approval of shareholders, the premises/land and other assets attached thereto, may be sold in the best interest of the Company and the value realised therefrom may be best put to use for expansion/growth of the Company’s business. The Directors recommend the Resolution for Member’s approval. None of the Director is concerned/interested in this resolution.

Item No. 8Proposal for change of registered office As per provisions of Section 146(2) of the Companies Act, 1956 read with proviso (b) thereto, shifting of registered office of a company outside the local limits of any city or town requires approval of shareholders by way of Special Resolution.With a view to improve co-ordination and communication between the corporate, marketing and site offices, the Board of Directors considered and subject to approval of shareholders, approved the proposal for shifting the registered office to Kolshet in Thane, where the manufacturing site, marketing offices and the technology labs of the Company are currently located. The proposed location is outside the local limits of Mumbai city and therefore requires approval of shareholders by way of special resolution. If approved, the registered office will be moved to Kolshet Road, P. O. Sandoz Baug, Thane 400 607 with effect from May 1, 2010.The Directors recommend the approval of the special resolution. None of the Directors is concerned or interested in the resolution.

By Order of the Board of DirectorsFor Clariant Chemicals (India) Limited

B. L. GaggarDirector Finance & Company Secretary

February 19, 2010.

Registered Office:Ravindra Annexe,194, Churchgate Reclamation,Mumbai-400 020

Secr-N.indd 12 3/17/2010 10:34:48 AM

13

Your directors are pleased to present the Fifty-third annual report and audited statement of accounts for the year ended December 31, 2009.

Financial ResultsThe financial performance of the Company for the year ended December 31, 2009 is summarized below:

Rupees - Lakhs

2009 2008Sales (Gross) 97322.24 100145.34Less: Excise duty (5188.11) (8505.87)Net sales 92134.13 91639.47Profit before exceptional items & taxation 18761.13 10776.60Less: Exceptional items (2450.46) (48.00)Profit before taxation 16310.67 10728.60Less: Provision for taxation (incl. FBT and deferred tax) (5466.34) (3732.21)Less: Short provision for taxation – Prior years (30.77) (248.09)Profit after tax 10813.56 6748.30Add: Balance brought forward from previous year 1097.40 950.36Amount available for appropriation 11910.96 7698.66Appropriations :General reserve 1081.36 674.83Interim dividend 2666.07 —Proposed final dividend 3999.11 5065.54Corporate tax on dividend (interim & final proposed) 1132.75 860.89Balance carried forward to balance sheet 3031.67 1097.40

Review of OperationsThe global economic and financial crisis that began in 2008 and continued to affect Indian economy till first half of 2009 had a crippling impact on the global chemical industry. This has affected the Company’s performance during the first 2 quarters of 2009. However, unexpected recovery in domestic market and excellent performance in terms of cost management has resulted into positive growth in terms of sales and benchmarking performance in net profits of your Company as compared to previous year. The following ratios appropriately reflect your Company’s operational performance during the year under review.

2009 2008Sales growth (%) 0.5 6.4 Domestic sales growth (%) 2.8 7.0 Export sales growth (%) (8.3) 4.0 PBDIT (% to sales) 22.6 14.9 PAT (% to sales) 11.7 7.4 ROCE (%) 30.9 21.0 Debt : Equity ratio 0.01 0.01 Earning per share (Rs.) 40.56 25.31 Cash earning per share (Rs.) 48.19 36.49Book value per share (Rs.) 130.45 119.14

DividendDuring the year, your directors had declared interim dividend of Rs. 10 per share (100%) and the same was paid in August, 2009. Considering the excellent performance for the year and the policy for distribution of profits to the shareholders adopted by the Company, the Board of Directors is pleased to recommend a final dividend of Rs. 15 per share (150%).

The total dividend for the year ended amounts to Rs. 25 per share (250%) as compared to Rs. 19 per share (190%) paid for the previous year. On the paid-up share capital of Rs. 2666 lakhs, the total payout on account of dividend and tax thereon for the year entails cash out flow of Rs. 7798 lakhs (previous year Rs. 5926 lakhs) and pay out of 72% of the net profit.

Divestment of BusinessThe Company, during the year sold its flexible laminating adhesive business for a total consideration of Rs. 3.6 crores to M/s. Bostik India Pvt. Ltd. The Company had also signed business transfer agreement (BTA) with M/s. Laxmi Organic Industries Ltd. for sale of its diketene and intermediates business located at Balkum, Thane together with movable assets, technical know-how and non-compete undertaking for a total consideration of Rs. 13.25 crores. On receipt of full consideration, the transaction is concluded in January 2010 and the plant is being dismantled and delivered to the buyer.

Registered OfficeThe registered office of the Company presently located at Ravindra Annexe, 194, Churchgate Reclamation, Mumbai-400 020 is under lease and the premises is under major repairs. For better co-ordination and effective communication between sites, offices and laboratories, the Board has decided that subject to approval of shareholders, the registered office of the Company be relocated at Clariant owned premises at Kolshet Road, Thane-400 607 effective from May 1, 2010. Shareholders are requested to approve the proposal.

Balkum, Thane siteThe Board of Directors of your Company has decided that subject to the decision on closure, divestment or sale of its existing business operations carried out at Balkum, Thane site and subject to approval of shareholders, the land/premises and other assets attached thereto, may be sold in the best interest of the Company and the value realised therefrom may be best put to use for growth of the Company’s business.

Shareholders are requested to consider and approve the proposal as set out in notice of the annual general meeting.

Directors’ Report

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Fixed DepositsThe Company has not accepted fixed deposits during the year under review. There were no overdue deposits except unclaimed deposits of Rs. 6000/- as at December 31, 2009 which has been subsequently deposited to Investor Education & Protection Fund of Government in January, 2010. As per requirements of Section 205C of the Companies Act, 1956, the fixed deposits and interest unclaimed after completion of seven years are transferred to the Investor Education and Protection Fund established by the Central Government. There is no amount due and outstanding to be credited to Investor Education and Protection Fund as on December 31, 2009.

Subsidiary CompanyThe audited accounts of the wholly owned subsidiary, Chemtreat Composites India Private Limited along with Auditors Report thereon, and the statement pursuant to Section 212 of the Companies Act, 1956, is a part of this annual report.

Consolidated Financial StatementsIn accordance with the Accounting Standards (AS-21), notified by the Companies (Accounting Standards) Rules, 2006, the consolidated financial statements covered in this annual report by the Company include financial information of its subsidiary Chemtreat Composites India Private Limited and forms part of this annual report.

Management Discussion and Analysis ReportThe Management Discussion and Analysis Report forming part of Directors’ Report for the year under review, as stipulated under Clause 49 of the listing agreement with stock exchanges, forms part of the annual report.

Corporate GovernanceThe Company is committed to maintain the highest standards of corporate governance. The report on corporate governance as stipulated under clause 49 of the listing agreement forms part of the annual report. The requisite certificate from the auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid clause is attached to this report.

Particulars of EmployeesThe statement giving particulars of employees, as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms part of this report. However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the annual report excluding the aforesaid statement is being sent to all the members of the company. Any member interested in obtaining a copy of this statement may write to the company secretary at the registered office of the Company.

DirectorsConsequent upon termination of agreement of Mr. Heiner Meier, as Vice-Chairman and Managing Director, the Board at its meeting held on October 29, 2009 considered and appointed Mr. Peter Palm as Vice-Chairman and Managing Director of the Company effective from January 1, 2010. The Board wishes to place on records its sincere appreciation for Mr. Meier’s valuable contribution since integration of Clariant group companies in India and welcomes the appointment of Mr. Palm in his place. Mr. Peter Lindner, who was first appointed as director of the Company on October 25, 2001 and Mr. Walter Kindler, who was appointed as director on February 20, 2009 to fill up the casual vacancy caused by resignation of Mr. Dominik Strebel resigned from the Board with effect from January 1, 2010.The Board at the meeting held on October 29, 2009 appointed Mr. Heiner Meier as director to fill up the casual vacancy caused by resignation of Mr. Lindner and Mr. Henri Schloemer as additional director with effect from January 1, 2010. The Company has received notice under Section 257 of the Companies Act, 1956 from a shareholder proposing Mr. Henri Schloemer as a director of the Company.

In accordance with the provisions of the Companies Act, 1956 and the articles of association of the Company, Diwan Arun Nanda, the director of the Company is due to retire at the forthcoming annual general meeting, and being eligible, has offered himself for re-appointment.

Details of the directors seeking re-appointment are provided in the Corporate Governance Report forming part of this report, as required under Clause 49 of the listing agreement with the stock exchanges.

Directors’ Responsibility StatementIn terms of Section 217(2AA) of the Companies Act, 1956 your directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2009 and of the profit of the Company for that year;

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

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

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and OutgoInformation required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto and forms part of the report.

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15Directors’ Report

AuditorsM/s. Deloitte Haskins & Sells, Chartered Accountants, retires at the conclusion of the ensuing annual general meeting and being eligible, offer themselves for re-appointment. Members are requested to appoint the auditors and fix the remuneration payable to them.

Cost AuditThe Board of Directors, in pursuance of an order under section 233B of the Companies Act, 1956 issued by the Central Government, has appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, as cost auditors to audit the cost accounts maintained by the Company in respect of Dyes and Intermediates for bulk drugs for the financial year 2009.

AcknowledgementThe Board of Directors place on record its sincere appreciation for the dedicated efforts put in by all employees, their commitment and contribution ensuring sustained operations that your Company has achieved in most difficult and challenging environment during the year. Your directors would like to record their sincere appreciation for the support and co-operation that your Company received from all the distributors, suppliers and business associates whom your Company regards as partners in progress.

The Board of directors also express their appreciation of the assistance and co-operation extended by the bankers and unstinted support received from Clariant group companies.

Your directors thank the members for their confidence in the Company.

For and on behalf of the Board of Directors

R. A. ShahMumbai, February 19, 2010 Chairman

Annexure to Directors’ Report

Information as per section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' report for the year ended December 31, 2009.

FORM-AParticulars with respect to conservation of energy

A. Power and fuel consumption:

2009 2008

1. Electricity:

a) Purchased:

Units (in ‘000 KwH) 49592 51119

Total amount (Rs. Lakhs) 2605 2316

Rate per Unit (Rs.) 5.25 4.53

b) Own Generation:

i) Through diesel generator

Units (in ‘000 KwH) 1650 1138

Units per Litre of diesel oil 3.28 3.19

Cost per Unit (Rs.) 10.58 11.56

ii) Through Steam turbine/ generator Nil Nil

2. Coal

Quantity (MT) 6178 3825

Total cost (Rs. Lakhs) 365 250

Average rate (Rs. per Kg.) 5.90 6.54

3. Furnace Oil (including L.S.H.S.)


Total Cost (Rs. Lakhs) 755 698


4. Other internal generation Nil Nil

5. Agro mass briquettes




6. Lignite / Fire wood




B. Consumption per unit of production:

The Company manufactures a wide variety of products. The products before reaching the finished final stage pass through various operations in the different plants. It is, therefore, not feasible to furnish the information in respect of consumption per unit of production.

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FORM-BForm of disclosure of particulars with respect to Technology Absorption, Research & Development (R & D).

Research & Development

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

R&D focused on two major aspects i.e. improved products and cost reduction. In the competitive market of specialty chemicals and colorants it is very much necessary to develop products with better application properties and ease of application. Improved product safety of products, especially for exports, was another important area in which R & D worked. With the increasing cost of raw materials, fuel and energies R & D’s efforts were directed towards optimization of the processes and operations of pigments, dyes, intermediates, surfactants and other specialty chemicals from cost reduction point of view.

2. Benefits derived as a result of the above R & D: The new as well as improved products created additional

business and also helped to achieve customers’ satisfaction. Process optimization lead to substantial cost reduction. Development of eco-friendly processes resulted in lower quantity of effluent and emission. Introduction of non toxic/non hazardous products conforming to product safety regulations resulted in higher and sustainable exports.

3. Future plan of action: R & D will continue focus on projects leading to further cost

reduction, improved product safety and ecology.

4. Expenditure on R & D:

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Capital 3.36 9.93

(b) Revenue 224.20 323.29

(c) Total 227.56 333.22

(d) Total R & D Expenditure as percentage of total turnover 0.25% 0.36 %

Technology absorption, adaptation and innovation:

1. Efforts, in brief, made towards technology absorption, adaptation and innovation:

The R & D department absorbs the knowledge of chemical technology from various sources such as know-how from the parent company and its worldwide affiliates, our own experimental data bank, published literature etc. and thereafter adapts the same to the Company's infrastructure. While adapting technology care has to be taken that it suits the locally available raw materials and production plants. Also it is to be ensured that the raw material specifications are not ‘over demanding’ and the raw material cost is affordable. The new/improved technology is used to effect improvements to the products and processes as well as for the containment of pollution.

2. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc.

Benefits derived from these efforts include process rationalization, product quality improvement, import substitution and overall cost reduction.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished.

(a) Technology imported : Nil

(b) Year of import : N.A.

(c) Has technology been fully absorbed? : N.A.

Foreign Exchange Earnings and Outgo

2009Rs. Lakhs

2008Rs. Lakhs

1. Total foreign exchange earned 18064.41 19734.02

2. Total foreign exchange used 23689.50 22923.72


R. A. ShahMumbai, February 19, 2010 Chairman

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17

Financial and Operational PerformanceThe year 2009 began with a very high degree of uncertainty and volatility in the Indian as well as the global economy. The sentiments, however, started improving in the later part of the year with pick up in domestic demand. Despite all the challenges, recession and downturns in the business all around the world, your Company was able to sustain its business performance and registered positive growth in sales and exceptional improvement in net results. While domestic sales grew by 2.8%, export sales were lower by 8.3%. Of the total sales revenue of the Company for the year, 18.6% is contributed by exports. Efficient cost management at all levels resulted in an impressive growth of 51.5% in profit before depreciation, interest, exceptional items and tax (PBDIT) and 60.2% in net profit after tax (PAT) over the previous year. The overall efficiency has resulted into improvement in PBDIT from 15% to 22.6% and PAT from 7.4% to 11.7% of sales as compared to the previous year. These results in the tough macroeconomic environment reflect the strength of the Company in the market place.

The Company has further consolidated its market leadership in the highly competitive textile chemicals and leather dyes sectors. It is constantly improving its market presence in other industry segments it participates in.

The Company remains a zero debt company with no long-term borrowings. Short-term borrowings are restricted to the need based working capital requirements. The Company has created a benchmark in efficient management of working capital. The year end ratio of inventory to sales of 8.3%, receivables to sales of 15.7% and net working capital (NWC) to sales of 7.6% is one of the best in the specialty chemical industry. Net cash flow from operating activities during the year was Rs. 17108 lakhs. Funds surplus to the operational needs have been prudently invested to earn reasonable returns with a high degree of safety. A sum of Rs. 12125 lakhs (previous year Rs. 5459 lakhs) stands invested in debt schemes of mutual funds at the end of the year.

During the year under review, all the plants had smooth operations and the capacity utilisation was on need-based requirement. The Company sold its non-core business of flexible laminating adhesives and entered into a business transfer agreement for sale of its diketene and intermediate business. Both these businesses during the year contributed Rs. 8568 lakhs by way of net sales.

Achievement of ISO 9001, ISO 14001 and OHSAS–ISO 18001 certification from SQS (Swiss Association for Quality Management System) for the Company’s Management Systems and for Environment Management and Safety in its operations reflects yours Company’s continuous commitment towards quality, safety and sustainable environment friendly approach.

Business Segments and Performance In accordance with the Accounting Standard – 17 notified by the Companies (Accounting Standards) Rules, 2006, the Company has reclassified its range of products into two reportable business segments based on characteristics of products, production processes and the class of customers.

1. Intermediates and Colours: The intermediates and colours segment comprises of

pigments, pigment preparations, additives, intermediates and masterbatches.

Clariant offers a wide range of products for optimal colour and performance solutions. High performance pigments serve a variety of industries including the automotive, architectural, cosmetics, packaging and printing trades and the product portfolio includes pigment preparations, special dyes, flame retardants, high quality waxes and polymer additives.

The pigments and additives businesses of the Company deal in pigments, their dispersions and diketene derivatives. They have a strong presence in organic pigments serving the needs of the paints, printing-inks, plastics, rubber, detergents, cosmetics and other industries. Besides being an important player in diketene chemistry, it has niche products in the colourant range to meet specific customer needs. The Company’s manufacturing facilities and state of art technical service laboratories provide cutting edge technology which helps in realizing the goals set by Clariant, for sustainable growth of the business. The Company is focusing on the promotion of lead- and chrome-free pigments and is spreading the awareness on use of non-halogenated flame retardants. The pigment and additives businesses of the company, during the year, had good domestic growth of 6%, however negative growth of 20% in exports resulted into net growth of -3% over the previous year.

The Clariant’s masterbatches business is a world leader in providing colour and additive concentrates and performance solutions for the plastic industry and holds strong positions in the packaging, consumer goods, automotive and fiber segments.

The masterbatches business of the Company services the plastic processing industry covering the product range of colour concentrates, additive masterbatches and special mixtures of pigments, additives, dispersing and wetting agents which have applications in a variety of industrial and consumer products such as automotive, packaging of pharmaceuticals, personal care, food & beverage products, packaging film & sheet, agriculture appliances, electrical connectors,

Management Discussion & Analysis

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wire & cables, medical equipment, household and consumer products, food services, toys, fibers & filaments, compound / MRP and construction etc. Clariant is recognized as an important supplier of specialty and tailor made masterbatches for the processing of polymers like LDPE, HDPE, HM-HDPE, PP, PVC, Nylon, PET, PBT and monofilaments, multi-filaments, staple and nonwoven fibers for technical textile applications.

The masterbatches business, during the year, had an excellent growth of 36% over the previous year. In order to cater to the market potential of it’s product range, the Company is in the process of expanding the capacities and setting up a green field manufacturing facility in MIDC, Ambernath.

The total sales under this segment of Rs. 39267 lakhs for the year comprises of pigments and additives of Rs. 32866 lakhs, masterbatches of Rs. 5318 lakhs and functional intermediates Rs. 1083 lakhs. The ratio of domestic sales to export sales was 73:27. The segment contributes 43% to the total sales and registered a negative growth of 2.2% over previous year.

2. Dyes and Specialty Chemicals:

The Segment comprises of specialty chemicals and dyes for the textile, leather and paper industry and performance chemicals for personal care and industrial applications.

Clariant’s textile, leather and paper chemicals businesses add value through functionality and aesthetics to the textile, leather and paper industries and provide solutions to meet customers’ needs across the entire production chain in the user industry.

The Textile business serves textile producers as well as retailers and brand owners with products and services for pre-treatment, sizing, fibre finishing, dyeing and printing to finishing. Clariant’s expertise in dyes and specialty chemicals makes the Company a perfect partner in every step of the textile process chain from fiber to finish. Clariant’s global service Archroma® provides a solution to manage colour standards along the whole textile chain and significantly accelerates time to market. The Company is the market leader in the segment of textile chemicals.

The Leather business develops and serves the market needs of dyes and chemicals to process, treat and colour leathers and to create specific effects and fulfil the performance requirements of specific leather products. Market leadership in India in the leather business is fortified with a comprehensive range of dyes and wet end chemicals that cater to the retanning, dyeing and finishing of all types of leather.

Clariant is the market leader in colourants and optical brighteners for paper and it’s specialty chemicals provide solutions, e.g. improve the strength of recycled paper. The Company has established itself as one of the preferred suppliers of dyes, optical brightening agents, surface and process chemicals for the domestic paper industry.

During the year, the businesses of textile, leather and paper had overall growth of 5% driven mainly by export growth of 100% over the previous year.

Clariant’s product portfolio based on surfactants, polymers and active ingredients provide products and solutions for the oil and gas industry and key ingredients for the home care and cosmetic sector. A wide variety of global industries, such as detergent, cosmetics, oil, gas, construction, agriculture, metal working, mining, paint and aviation sectors use high-tech functional chemicals in their products. Clariant is a dominant player in the lubricant segment supplying brake fluids, engine coolants and specialty additives and is a preferred supplier of specialty ingredients for skin and hair care, wet wipes and selected pharmaceutical applications in the personal care segment. The Company is a leading supplier of biocides to the coating and construction industries and a solution provider for solvent recovery systems.

Given the product range, the strong brand image created by the parent company coupled with capabilities of providing technical services in product development and application process, the Company is well positioned in this business segment.

The total sales under this segment of Rs. 52867 lakhs for the year comprises of Rs. 46352 lakhs (87.7%) from domestic and Rs. 6515 lakhs (12.3%) from export sales. The Dyes and Specialty Chemicals segment has contributed 57% of total sales revenue for the year registering a growth of 2.7% over previous year.

The segment wise financial performance of the Company is summarised below:

(Rs. Lakhs)

Segments 2009

% to Total

Sales 2008

% to Total

Sales

Intermediates & Colours 39267 43% 40169 44%

Dyes & Specialty Chemicals 52867 57% 51470 56%

Total 92134 100% 91639 100%

Internal Control Systems

The Company has a comprehensive system of internal controls to safeguard the Company’s assets against loss from unauthorized use and ensure proper authorization of financial transactions. The system is designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with applicable laws and regulations. The organization is well structured and the policy guidelines are well documented with pre-defined authority where monetary decision is involved. Structured management information and reporting systems together with an exhaustive budgetary control process for all major operational activities form part of the overall control mechanism to ensure that requisite information related to all operations are reported and are available for control and review.

The Company has established a well laid out policy to maintain the highest standards of environment, safety and health while maintaining operational integrity. This policy is strictly adhered to as per Clariant guidelines at all manufacturing sites.

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19Management Discussion & Analysis

The Company, with a view to encourage independent approach, has outsourced the function of internal auditors to qualified professionals, who conduct operational and system audits in accordance with an audit plan adopted by the audit committee. Internal auditors as part of their assignment, evaluate and assess the adequacy and effectiveness of internal control measures and the compliance with policies, plans and statutory requirements. The internal audit reports are reviewed at audit committee meetings and appropriate action on the recommendations is initiated by the management.

Human Resources

Human resources continue to be an invaluable and intangible asset and key success factor for the Company to grow and sustain it’s market position in a highly competitive and challenging environment. Clariant firmly believes that people are the pivotal force behind the growth and excellence in business operations. The overall performance and the market position, the Company enjoys are the result of the aggregate strength of it’s people.

The Company during the year, paid special attention to developmental activities comprising of sharpening of skills and abilities, developing academic and professional knowledge and cultivating appropriate behavioral skill sets, such as improving interpersonal relations, team building abilities, effective communication and presentation skills. Focus on developing leadership skills and building talent for the future and the process of improving organizational and human capability through competency mapping of managerial positions in all areas of the company’s operations, continued as a major initiative.

The Company has put great emphasis on the project “Clariant Excellence” and has trained 4 black belts and 21 green belts in the Lean Six Sigma process to identify further opportunities of cost savings and process improvements.

The Company is committed to provide the right environment to it’s employees to work and to inculcate a sense of ownership and pride.

Cordial relations built on the strength of mutual trust and faith in each other, prevailing at all locations, helped the Company in downsizing the work force, earlier engaged in operations, which are discontinued at Cuddalore in Tamilnadu and Balkum in Thane. The voluntary retirement scheme, offering one of the best packages prevalent in the industry, announced by the Company was well responded to and a sum of Rs. 2810 lakhs were paid during the year to 161 employees at all levels in the organisation. The total number of employees on the rolls of the Company as at December 31, 2009 was 945 against 1,172 on December 31, 2008.

Industry Structure and DevelopmentThe Indian chemicals and petrochemicals industry is worth about US$ 78 billion. The industry with investments worth US$ 60 billion, contributes 3% to India’s GDP and 14% to total exports, employs around 1 million is the largest in Asia and 12th in the world. Till the recent slowdown, the industry was growing at 6%-10% per year, as against the global average of 3%-4%. The industry exports more than 50% of its production and thus is deeply connected to the global economy. However, India’s share in global exports and imports is

less than 2%. The industry had an export growth rate of 27%, which has come down to 16%, as a result of the global economic crisis. Half of the chemical market is currently occupied by basic chemicals such as petrochemicals and fertilizers. The rest comprises evenly of specialty chemicals such as paints, dyestuffs and intermediates and knowledge chemicals such as pharmaceuticals, bio chemicals and agro chemicals. The growth rate of basic chemicals is 7-8% but that of specialty and knowledge chemicals is 13-15% and a great expectation is placed on its future growth.

India has achieved considerable progress in the production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and specialty chemicals and toiletry products. With the slash in tariffs, the Indian chemical industry with well-built systems and segment focused operations is likely to benefit further. It is not only the country’s oldest industry, but contributes to India’s growing economy in a phenomenal way. The industry is highly diversified and serves the basic needs of many different industry verticals like natural gas, water, oil, metals, minerals, air, oil, etc and all these verticals eventually bring into the marketplace an array of products. The companies manufacturing high value chemicals and compliant with industrial quality standards, are capable of making their mark not just in India but in the overseas markets as well.

Indian dyes are in demand world over. Pigments and Dyes are primarily used in paints, inks, textiles, leather, paper, foodstuffs and polymers. The textile industry accounts for the largest consumption of dyestuffs. India has emerged as a global supplier of dyestuffs and dye intermediates, particularly for reactive, acid, vat and direct dyes approximately 6% of the world production. The total market of paint and dyes is about US$ 1 billion with a growth rate of about 10%. The dyestuff market is highly fragmented with high concentration in Maharashtra and Gujarat. There are about 25 large and medium players, which cover 50% market share, while 2000 other organized players contribute the balance 50%. The per capita consumption of dyestuff is very low in India (400 gms) as compared to the developed countries (15 kgs). The plastics & polymer segment is growing steadily with a very high potential of domestic consumption. It remains one of the fastest growing markets in the recent past. Many overseas plastic processors have started investing in India for exports as well as for domestic consumption. However, the capacities of these plants remain small.

The Indian textile industry size is estimated to expand significantly from the present US$ 50 billion and it accounts for around 4% of the Gross Domestic Products (GDP), 14% of Industrial production and over 13% of the country’s total export earnings. The textile industry is capital intensive and in recent years it has invested significantly on capital assets by acquiring sophisticated new machinery. This has gone a long way towards upgrading products to international standards and massive investment is expected further. All this has enabled the industry to entrench itself firmly and make an entry into the society of top fashion, formal and leisurewear garments. India is emerging as a one stop shop for all textiles and clothing requirements. Clariant is a market leader in textile chemicals and has a significant presence in all segments of the industry including technical textiles.

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World trade in leather is estimated at about US$ 150 billion and India’s share is US$ 3.5 billion despite having the advantage of a large labour force and a wide raw material base. Dwindling exports in the wake of the global demand slump and stiff competition from countries like China and Vietnam have resulted into a fall in leather exports by 17% in dollar terms and 8% in Rupee terms during the nine months ended December 31, 2009 when compared with the same period a year ago and the industry expects that the exports during 2009-10 will show a decline of about 10-15%. Contrary to the dismal show by the Indian leather industry, the Company has done extremely well with a strong growth in exports led by Clariant Group demand. The Company has a wide product range for leather dyeing and finishing chemicals to cater to the market needs for a variety of products and is the market leader in wet end chemicals.

The Rs. 16000 crore Indian paper industry is currently investing on capacity expansion, pollution control measures and environmental management plans. The total paper demand in the country according to industry estimates is about 94 lakh tonnes a year with packaging contributing to about 24% and newsprint 20%. Clariant’s paper business offers a wide range of high performance products for improving whiteness, strength, strong and bright shades with excellent printability.

The Indian paint industry has seen remarkable changes during the last decade. In this period, almost every major multinational has established or entrenched their presence, incumbents have built on their market position and the industry has become far more sophisticated in terms of the products it manufactures, the way it sells to customers and the range of technologies it uses. Overall paint demand in India has grown 1.5 times the GDP growth, though some segments have done better. The Company has positioned itself as preferred supplier of pigments, additives and intermediates to major paint, coatings and ink manufacturing companies in the country.

The personal care sector in India is set for a lot of action by way of expansion in capacity, fast replacement of product portfolio and investment in research and development projects to sustain its growth momentum in the Rs. 9500 crore personal care businesses. Clariant with its strong global presence is looking forward for improving its position in this segment.

The Company has diversified product ranges catering to the needs of variety of user industries and these are classified into two broad business segments of Intermediates and Colours and Dyes and Specialty Chemicals. Details on these segments are described in this report under ‘Segment wise performance’.

OutlookIn spite of deceleration from 9% GDP growth to about 7% GDP growth in 2009-10, India remains the second largest growing economy in the world. The index of industrial production has surged by an incredible 16.8% in December 2009 against a contraction of 0.2% a year ago. For the period April-December 2009, the average industrial growth rate worked out to 8.6%, much better than the growth of 3.6% during the same period in 2008. Based on the growth rate of the broad industry groups, the trend during the current year is encouraging.

The Indian chemical industry is on a high growth trajectory and through a series of efforts, expected to achieve USD 100 billion in the upcoming years. The industry today is into manufacturing of a wide range of goods including fine and specialty chemicals, drugs and pharmaceuticals, dyes and pigments, agrochemicals and fertilizers, pesticides, plastics and petrochemicals etc. and its contribution to the Indian manufacturing sector is about 18%. The positive factor for the Indian chemical industry is the demand for its products that is largely driven by the domestic market. Considering the very low per capita consumption ratio, it has great potential for fast growth and with its inherent strengths of low cost and highly qualified workforce, it is expected to play the role of an export base to Europe and Middle East. However, the industry is yet to make its presence felt in a significant way in the international markets and factors like global recession and financial crises had significant impact on the manufacturing and export sector of the industry.

Although 2009 has seen enough challenges, recession and downturns, the Company has withstood all such pressures and strongly positioned itself to meet the challenges of the future. While some of the effects of the global economic scenario still persist, 2010 promises to be much better to forge ahead. Considering the strong presence in different market segments, it’s technological ability to provide solutions to user industries, rapid response in adapting to change in fashion and preference of people, global affiliation and brand image of Clariant world-wide, the future outlook of the Company’s business is positive and sustainable growth is expected in coming years.

Opportunities and Threats

The overall performance of the Indian chemical industry even when the world is reeling under financial and economic recession is satisfactory given the performance in the domestic markets. Global recession is a reminder call for domestic industries to up-grade the quality of products, technical services, cost competitiveness and processing efficiencies, etc. Although small in size, the Indian chemical industry is a net exporter. Per capita consumption in each of its industry segment is very low and is about 1/10th of world average, thus hold strong potential to grow in domestic markets.

To counter the negative fallout of the global slowdown on the Indian economy, the Government responded by providing a substantial fiscal expansion in the form of tax relief to boost demand and increased expenditure on public projects. In view of good performance by industries, financial stimulus if rolled back, could affect domestic demand in certain sectors for a temporary period.

The Business environment for the chemical industry globally has been changing very fast and if the Indian chemical businesses have to hold against competition they have to change and adopt their strategies, methodology of working and organisational structure. China is becoming the biggest threat to the Indian chemical industry with their excess capacity and controlled exchange rate of Yuan, making Indian products uncompetitive.

The area of challenge and concerns which the Indian chemical industry will need to face are non-tariff barriers, by way of international treaties, which at times appear well and innocuous but have been

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21Management Discussion & Analysis

used against the Indian chemical industry in the past and will have to be reckoned with, as our industry makes inroads into global trade in chemicals so far dominated by developed nations. A plethora of taxes, levies and duties charged while transacting business within and across states, often exceeds the duty barrier that exporters to the Indian market face. The high cost of internal transactions needs to be appropriately addressed so as to provide Indian manufacturers a level playing field. India still has a problem of infrastructure like insufficient power supply and underdeveloped road network.

Highly developed technology, in-depth research capabilities, backward and forward linkages, development of domestic capacity to decrease the dependence on imports are some of the crucial factors that need to be taken into consideration. Nowadays, safety, health and environment protection issues have become the major-talking point in almost all industries and even in the Indian chemical industry too. The Indian chemical manufacturers are addressing the issue on a war-footing.

Government’s initiative to promote six Petroleum, Chemicals and Petrochemical Investment Regions (PCPIR) is hoped to change the fortunes for the Indian Chemical industry. Despite the difficult time, the dyestuff and specialty chemicals industry holds a lot of promise for India. The industry is a potential powerhouse benefiting from comparative low labour costs, an excellent army of technical manpower, capabilities for research and development facilities, a huge and fast developing domestic market and the potential to increase it’s share in global markets.

A diversified product range, proactive preparedness in adjusting to demand and supply levels and aggressive customer support services have provided a cushion to the Company to withstand the pressure of global meltdown and downturn in the industry. With strong technology support from the parent company, state of art product development facilities, a world class product safety laboratory with excellent product testing facilities and continuous emphasis on cost management, the Company is well prepared to exploit the opportunities both in the domestic and global markets to improve it’s presence. The Company has placed continuous emphasis on cost management.

Risks and ConcernsClariant’s approach to Risk Management is designed to clarify risk levels and encourage entrepreneurial behavior throughout the Group. The Company’s risk management policy is in line with Clariant’s global guidelines on risk management and adequate measures have been adopted by the Company to combat various risks including business risks (competition, consumer preferences, technology changes), financial risks (cost, credit, liquidity, foreign exchange) hazard risks (environment, safety and health), operational risks (system, process, people) and regulatory and compliance risks.

The Company has adopted a focused approach towards risk management in the form of a corporate insurance program which has the goal of optimizing the financing of insurable risks by using a combination of risk retention and risk transfer techniques. The program covers any risks relating to business interruption resulting from property damage and legal liability resulting from operations and personal injury.

The Company has in place a responsive system to assess the capabilities of all its vendors and distributors before being selected and their performance is periodically reviewed for managing risks, if any. The Company’s approach in providing solutions and servicing it’s customers for over five decades, it’s attitude towards the vendors and customers to consider them as it’s partners in progress provide the Company requisite comforts to mitigate risks arising out of competition and loyalty. The Company has put in place a system driven credit control procedure and proactive approach to prepare a liquidity planner and a constant review thereof to ensure that at any given point of time there is adequate cover available to meet its liabilities.

Clariant as a group is proactively committed to taking into consideration environment protection and safety in all our activities. Risk associated with protection of environment, safety of operations and health of people at work is monitored regularly with reference to statutory regulations prescribed by the government authorities and guidelines defined by Clariant. The Company does not merely fulfill the legal requirements concerning emission, waste water and waste disposal, but actually works to even stricter self imposed standards. The Company has created a benchmark of completing the internal landmark of 50 lakhs man-hours of accident free working between November 2007 and January 2010.

The Company’s business critical software is operated on a server with regular maintenance and back-up of data. The global communication network is managed centrally and is equipped to deal with failures and breakdowns. Updated tools are regularly loaded to ensure a virus free environment.

The Company operates within the letter and spirit of all applicable laws. The Company has put in place a system driven legal compliance manual and certification process that ensures compliance of regulatory provisions and the same is periodically reviewed to avoid any deviations and regularly updated to keep pace with the regulatory changes. The Clariant code of conduct covers responsible behavior, protecting the reputation of the company and reducing risks for our shareholders.

Cautionary Statement

Certain statements under “Management Discussion & Analysis” describing the Company’s objectives, projections, estimates, expectations or predictions may be forward looking statement within the meaning of applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could materially differ from those expressed or implied, since the Company’s operations are influenced by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events

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Company’s philosophy Clariant Chemicals (India) Ltd., part of the Clariant Group, committed to the highest standards of Corporate Governance, has over the years practised good corporate governance and is committed to create value to all its shareholders. The Company is driven by its core values, viz. ethical practices, concern for people at work, delight of customers and striving to meet the stakeholders’ expectations and societal aspirations.

The Company believes that governance should be functioning beyond compliances, adherence to regulatory frame work, financial prudence and should create fair and transparent processes and reporting systems. The focused approach, professionalism of Board and fair and transparent processes have led your Company to new heights. Corporate Governance has been strengthened by formulating and adopting Code of Conduct for directors and senior members of management. The Company makes best efforts to use best-in-class technology, focus on providing solution and service to its customers thereby creating value chain, promote highest levels of safety in its operations, maintain better health of its employees, provide a clean environment for sustainable development and meet the objectives of shareholders by providing them fair returns and value.

1. Group Structure:Your Company is an affiliate of Clariant AG, Switzerland, a global leader in the field of specialty chemicals represented on five continents with over 100 group companies and headquartered in Muttenz near Basel. In accordance with the Group‘s business structure, the Company operates in four business divisions viz. TLP (Textile, Leather & Paper), P&A (Pigments and Additives), Functional Chemicals and Masterbatches and these are classified in two business segments Intermediates & Colours and Dyes & Specialty Chemicals.

2. Board of Directors2.1 Composition and the Changes: The Company as on December 31, 2009 had seven Directors

comprising of six non-executive Directors including Chairman. The day to day management of the Company is conducted by Vice-Chairman and Managing Director subject to supervision and control of the Board of Directors. The independent Directors take active part in the Board and Committee Meetings, which adds value in the decision making process of the Board of Directors.

Mr. Heiner Meier led the team of management as Vice-Chairman & Managing Director for the year. However, upon termination of his agreement, Mr. Peter M. Palm is appointed as the Vice-Chairman and Managing Director in his place with effect from January 1, 2010. Mr. Dominik Strebel resigned during the year and Mr. Walter Kindler was appointed in the casual vacancy caused by his resignation. However, Mr. Kindler resigned as Director as of December 31, 2009 and Mr. Henri Schloemer is appointed as Additional Director effective from January 1, 2010. Mr. Peter Lindner resigned as of December 31, 2009 and Mr. Heiner Meier is appointed with effect from January 1, 2010, in the casual vacancy caused by resignation of Mr. Lindner.

The composition and category of the Board of Directors as at December 31, 2009, the number of other directorships/ committee memberships held by them and also the attendance of the Directors at the Board meetings of the Company is as under:

Report on Corporate Governance

Name of the Director CategoryParticulars of Attendance No. of other Directorships and Committee memberships/

Chairmanships in Indian Public Companies#Number of Board meetings Last AGM held

on April 29, 2009Other Directorships* as on December 31, 2009

Committee Memberships

Committee ChairmanshipsHeld Attended

Mr. R. A. Shah DIN 00009851

Non-Executive Independent

6 6 Attended 14 10 5

Mr. H. Meier DIN 00726512

Executive 6 6 Attended None 1 None

Mr. P. Lindner DIN 01417833

Non-Executive 6 1 Attended None None None

Dr. A. Walde DIN 01417867

Non-Executive 6 0 Not Attended None None None

Mr. B. S. Mehta DIN 00035019


6 6 Attended 14 10 5

Diwan A. Nanda DIN 00034744


6 4 Attended 5 3 1

Mr. Dominik Strebel DIN 01859786

Non-Executive 1 0 NA None None None

Mr. Walter Kindler DIN 02511867

Non-Executive 5 1 Attended None None None

* This excludes alternate directorships/directorships in private limited companies, foreign companies and companies governed by Section 25 of the Companies Act, 1956 wherever applicable.# It excludes committees other than Audit Committee, Shareholders/Investor Grievance Committee and companies other than public limited company but includes committee membership/ chairmanship

in Clariant Chemicals (India) Ltd.

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23Report on Corporate Governance

2.2 Profile of Members of the Board of Directors being appointed/re-appointed:

Mr. Peter Palm

Mr. Peter Palm a German national has done his Certificate of Business Administration from Chamber of Commerce Frankfurt Am Main awarded in 1970 and completed management training in UK, Switzerland and other countries. Before joining the Company as Vice-Chairman and Managing Director he had international postings in India, Afghanistan, Sri Lanka, Saudi Arabia, Nigeria, South Africa and since the year 2005 he was Country President of Clariant UK & Ireland.

Diwan A. Nanda

Diwan A. Nanda, a gold medalist from the Indian Institute of Management, Ahmedabad has over 40 years of vast experience in marketing & advertising and has held various positions in academics and advertising. He started his career in marketing in Hindustan Lever Limited and later founded ‘Rediffusion’ an advertising agency in 1973 and is on the board of Rediff.com India Ltd. and Eveready Industries (India) Ltd. He is the recipient of AAAI Premnarayan award for outstanding contribution to advertising in India in 2002.

Dr. Henri Schloemer

Dr. Henri Schloemer, a German national, received his doctorate degree in Business Administration from the German University of Bochum. He joined Clariant 1998 and later became CFO for Clariant’s German operations. In 2007 he was appointed as Managing Director of Clariant Germany and later in 2009 became Head of the Corporate Affairs department at Clariant’s headquarters in Muttenz, Switzerland, responsible for strategy, mergers & acquisitions and worldwide regions for Clariant.

2.3 Board Meetings and Agenda:

In compliance with the provisions of clause 49 of the listing agreement, the Board meets at least once in every quarter to review the performance and to deliberate and consider other items on the agenda. Six meetings were held during the year on February 20, 2009, April 29, 2009, May 14, 2009, July 24, 2009, October 29, 2009 and December 14, 2009.

The agenda of the Board of Directors’ Meeting interalia includes the following:

• Annualrevenueandcapitalinvestmentbudgets;

• Theunauditedquarterly,half-yearlyfinancialresultsand the audited annual accounts of the Company, both consolidated and on a standalone basis including segment wise revenue, results and capital employed;

• Declarationofdividend;

• Sale of material nature, of investments, assets,business, which is not in normal course of business;

• Investmentincapitalprojectsofmaterialnature;

• The minutes of the Board meetings of subsidiarycompany;

• Minutes of the meetings of Board, Audit andInvestors’ grievance committees, as also the resolutions passed by circulation;

• Internal audit reports and the status onimplementation of suggestions;

• Costauditandsecretarialauditreports;

• Proposalsforjointventure,collaboration,merger&acquisition, if any;

• Makingofloansorinvestmentofsurplusfunds;

• Appointment of statutory auditors, cost auditors &internal auditors;

• Appointment of key management positions belowthe Board level;

• Issuesrelatingtoshareholders–suchasratificationof transfers, demat status, pending grievances, issue of duplicate share certificates, etc.;

• Materially important show cause, demand,prosecution and penalty notices;

• Fatal or serious accidents, dangerous occurrences,any material effluent or pollution problems;

• Defaultsinpaymentofstatutorydues,ifany;

• ReviewofForeignexchangeexposureandexchangerate movement, if material;

• Contracts in which Director(s) are deemed to beinterested;

• Mattersrequiringstatutory/Boardapprovals;

• Reviewofrelatedpartytransactions;

• Status on compliance of regulatory/statutory andlisting requirements;

• Issue/revocationofPowerofAttorney;

• CommissionpayabletoDirectors;

• GeneralnoticesofinterestofDirectors;

• AppointmentofManagingandotherDirectors.

3. Board Committees: The Board has constituted two committees viz., Audit

committee and Investor Grievance Committee. The roles and responsibilities assigned to these committees covered under the terms of reference approved by the Board are subject to review by the Board from time to time and the minutes of the meetings of these committees are reviewed and taken note by the Board. The details as to the composition, terms of reference, number of meetings and related attendance etc. of these committees are provided below.

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3.1 Audit committee:3.1.1 Composition:

Mr. R. A. Shah, Diwan A. Nanda and Mr. H. Schloemer are the members of the Audit Committee after January 1, 2010. Mr. Dominik Strebel was member of the Audit Committee till February 20, 2009 and consequent upon his resignation Mr. Walter Kindler was inducted as member of Audit Committee till December 31, 2009. Mr. R. A. Shah chairs the committee. The statutory auditors, internal auditors and cost auditors are also invited to attend the audit committee meetings from time to time. The composition of the Audit committee meets the requirements of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement.

Mr. H. Meier, the then Vice-Chairman & Managing Director attended the Audit Committee meetings as special invitee. Mr. B. L. Gaggar, Director Finance & Company Secretary represents the finance function and also acts as Secretary to the committee. All major variances affecting the performance of the Company are discussed and explained. During the year four meetings of the Audit Committee were held on February 20, 2009, April 29, 2009, July 24, 2009 and October 29, 2009.

Attendance at Audit Committee meetings:

Name of Director Category Status Number of Meetings

Held Attended

Mr. R. A. Shah Independent Chairman 4 4

Diwan A. Nanda Independent Member 4 4

Mr. Dominik Strebel (Up to February 20, 2009)

Non-Independent Member 1 0

Mr. W. Kindler (from February 20, 2009)

Non-Independent Member 3 1

3.1.2 Scope of Audit Committee:

The Audit Committee assists the Board in fulfilling its obligations relating to corporate accounting and reporting practices, financial and accounting controls and presentation of financial statements and thus provides effective supervision of the financial reporting process. The committee also reviews the appointment, independence and performance of statutory auditors, the performance of internal auditors and the Company’s internal control and risk management policies. The terms of reference of the audit committee are in accordance with clause 49(II) (D) of the listing agreement entered into with the relevant stock exchanges and include:

(i) Overseeing the Company’s financial reporting process and the disclosure of its information to ensure that the financial statements are correct, sufficient and credible;

(ii) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of statutory auditors and fixation of fee for audit and other services;

(iii) Reviewing with the management, the annual financial statements before submission to the Board for approval.

The Audit Committee is empowered to exercise its rights under clause 49(II)(C) and also reviews various information prescribed under clause 49(II)(E) of the listing agreement entered into with the relevant Stock Exchanges.

3.2 Remuneration Committee: The Company has not constituted a remuneration Committee

as compensation/remuneration payable to the directors are approved by the shareholders in the general meeting.

The Company has no pecuniary relationship or transaction with its Non-executive directors other than payment of commission, which has been approved by the shareholders and payment of dividend on equity shares, if any, held by directors in the Company. The Company has been seeking legal consultations from M/s. Crawford Bayley & Co., Advocates & Solicitors on various matters and a sum of Rs. 33,06,705 (Previous year Rs. 3,65,363) has been paid as professional fees to the said firm during the year ended at December 31, 2009. Mr. R. A. Shah, who is the Chairman of the Company, is the senior partner of the said firm. The aforesaid professional fee is not considered material enough that may have potential conflict with the interest of the Company and to impinge on the independence of Mr. Shah.

The details of remuneration paid to Directors for the year ended December 31, 2009 is as follows:

Rupees (in Lakhs)

Name of Director Sitting fees

Salary, Perquisites, Contribution to Provident

Fund

Compensation for loss

of office

Commission Total

Mr. R. A. Shah 0.50 – – 4.00 4.50

Mr. H. Meier – 149.51 40.83 26.75 217.09

Mr. B. S. Mehta 0.45 – – 3.00 3.45

Diwan A. Nanda 0.50 – – 3.00 3.50

The Company has no scheme for grant of stock options to the Directors.

3.3 Investors’ Grievance Committee: The Investor’s Grievance Committee, during the year,

comprised of Diwan A. Nanda non-executive independent director as Chairman and Mr. H. Meier Vice-Chairman & Managing Director as a member. Consequent upon the termination of agreement with Mr. H. Meier,

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Mr. Peter Palm replaces as member of the committee effective from January 1, 2010.The committee, inter alia, approves issue of duplicate share certificates and oversees and reviews all matters connected with transfer of shares of the Company. The committee also looks into redressal of shareholders’ complaints related to transfer of shares, non receipt of annual report and dividend warrant etc. The committee monitors implementation and compliance of the Company’s Code of Conduct for prohibition of insider trading in pursuance of SEBI (Prohibition of Insider Trading) Regulations, 1992. The committee met twice on April 29, 2009 and October 29, 2009 during the year and these were attended by both the members.

To expedite the process of physical transfer of shares, the Board has delegated the authority to Mr. B. L. Gaggar Director Finance & Company Secretary who is the compliance officer of the Company. In accordance with the authority granted by the Board, Mr. Gaggar deals with transfer/transmission of physical shares, split/sub-division and consolidation of physical shares and rematerialisation of shares. The physical transfers of shares are ratified at the Board meetings.

M/s. Sharepro Services (India) Private Limited, the Registrar and Share Transfer Agents, deals with all shareholders related matters for both physical and demat holding. The Company has retained the services of a practicing Company Secretary to perform Secretarial Audit every quarter. No non-compliance from established procedures is reported.

Pursuant to Clause 41 of the Listing Agreements, investor grievance redressal status is reported every quarter to the Stock Exchanges and the numbers of unattended grievances are published in the news papers along with financial results.

There was one investor complaint pending as on December 31, 2009 which is being attended.

4. Subsidiary Company The Company does not have material non-listed subsidiary

whose turnover or net worth (i.e. paid-up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding Company. Chemtreat Composites India Private Limited, a wholly owned subsidiary Company, has its production base at Khopoli, in the Maharashtra state. As a majority shareholder, the Company nominates its representatives on the Board of the subsidiary company and monitors the performance through quarterly review of financial statements by Audit committee and review of minutes of the Board meeting by Company’s Board.

Mr. Heiner Meier, Mr. Walter Kindler and Mr. B. L. Gaggar were the Directors of Chemtreat Composites India Private Ltd. Upon resignations of Mr. Meier and Mr. Kindler with effect from January 1, 2010, Mr. Peter Palm and Mr. Henri Schloemer are nominated as the Directors on the board of subsidiary company.

5. General Body Meetings: Location, date and time of the Annual General Meetings

of the Company held during the preceding 3 years and the Special Resolutions passed thereat are as follows:

AGM Venue Date and Time

Special Resolutions Passed

50th Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai 400 021

April 19, 2007 4.00 p.m.

No special resolution.

51st Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai 400 021

April 17, 2008 4.00 p.m.

i) Enhancement of the borrowing limits of the Company from Rs. 125 crores to Rs. 300 crores.

ii) Payment of commission to the Directors other than Managing Director.

52nd Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai 400 021

April 29, 2009 4.00 p.m.

i) Re-appointment of Mr. H. Meier as the Vice-Chairman & Managing Director.

ii) Amendment of Articles of Association of the Company.

There was no postal ballot conducted during 2009 and any of the preceding three years.

6. Disclosures:6.1 Materially significant related party transactions:

The Company has not entered into any transactions of material nature, with its promoters, the directors, or the senior management personnel, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company. The disclosure in respect of related party transactions is provided in the notes to the accounts. All contracts with the Clariant affiliates entered into during the year are in the normal course of business and have no potential conflict with the interest of the company at large and are carried out on an arm’s length basis at fair market value.

6.2 Code of Conduct

The Board of Directors has adopted the Code of Conduct for Directors and senior management personnel and the same has been placed on the Company’s website. The Code has been circulated to all the members of the Board and senior management personnel and the compliance of the same is affirmed by them annually. In addition, a standard international Code of Business Conduct formulated by Clariant Group is applicable to all employees of the Company.

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The Vice-Chairman & Managing Director has confirmed the compliance of code of conduct and as required under sub- clause I(D) of clause 49 of the listing agreement given a declaration as under:

“In accordance with sub-clause I(D) of Clause 49 of the Listing Agreement with the Stock Exchanges, I hereby confirm that, all the Directors and the Senior Management Personnel of the Company have affirmed compliance with the code of conduct applicable to them, for the year January to December, 2009”.

6.3 Prohibition of Insider Trading: The Company has framed its Insider Trading Regulations

wherein rules for the preservation of price sensitive information, pre-clearance of trade, monitoring and implementation are framed. This code is applicable to all Directors and such employees of the Company who are incidental to have access to unpublished price sensitive information relating to the Company. Transaction for dealing in the prescribed volume of the security of the Company during the prescribed time requires prior approval from the Company.

None of the Directors is holding any shares in the Company as on December 31, 2009.

7. Means of Communication: • The Company has 30,656 shareholders as on

December 31, 2009. The main channel of communication to the shareholders is through annual report which includes inter alia, the Directors’ Report, the Auditors Report, Report on Corporate Governance, Audited Financial Statements, Consolidated Financial Statements and other important information. The Management Discussion and Analysis Report forms part of the Annual Report.

• The website of the Company www.clariant.in actsas the primary source of information regarding the operations of the Company. Quarterly financial results and media releases are being displayed on the Company’s website.

• TheAnnualGeneralMeeting istheprincipal forumfor face-to-face communication with shareholders, where the Board responds to the specific queries of the shareholders.

• Quarterly results, approved by the Board ofDirectors and submitted to the Stock Exchanges in terms of the requirements of clause 41 of the Listing Agreement are published in the prominent English publications such as Financial Express/Business Standard and prominent vernacular publications such as Maharashtra Times/ Nav Shakti/Sakal.

8. General Shareholder Information:8.1 Annual General Meeting

Date & Time:

Friday, April 23, 2010 at 04.00 p.m.

Venue:

Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Next to Sachivalaya Gymkhana, Mumbai-400 021.

8.2 Voting rights:

In terms of Articles 93 to 105 of the Articles of Association of the Company, every member present in person or proxy, attorney or representative at the general meeting of the members shall have the following voting rights:

• Onashowofhands:onevoteforamemberpresentin person;

• Onapoll:onevoteforeachequityshareregisteredin the name of the member or held by the beneficial owner;

• Proxyhasnorighttospeak.

8.3 Financial Calendar:

The Company’s financial year is period of twelve months from January to December.

Dates for Audited/Unaudited Results:

Financial Year January-December 2009

Financial Year January-December 2010 (Proposed)

January – March April 29, 2009 April 23, 2010

April – June July 24, 2009 July, 2010

July – September October 29, 2009 October, 2010

October – December February 19, 2010 February, 2011

Annual General Meeting April 23, 2010 April, 2011

8.4 Dates of Book Closure

January-December 2010

January-December 2011 (Proposed)

Book Closure dates April 13, 2010 to April 23, 2010 (Both days inclusive)

Second fortnight of April 2011

Payment of Dividend On or after April 24, 2010

Immediately after AGM

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8.5 Listing of Shares:

Shares of the Company are listed on Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Limited (NSE).

The Company has paid the listing fees upto March 31, 2010 to both the Stock Exchanges.

8.6 Stock Code:

Name of the Stock Exchange

Stock Code Closing Price as on 31.12.2009

BSE CLARICHEM Rs. 467.90

NSE CLNINDIA Rs. 470.40

Company Registration Number with ROC/Ministry of Corporate Affairs

CIN : L24110MH1956PLC010806 ISIN : INE492A01029

8.7 Stock Market Data Price Rupees per share:

Month Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)

2009 High Rs. Low Rs. Volume (Nos.)

High Rs. Low Rs. Volume (Nos.)

January 179.90 145.00 92853 179.65 145.00 39013

February 175.90 144.30 563745 175.50 146.10 413017

March 205.00 164.00 934184 205.00 162.70 346991

April 213.85 153.00 344594 214.40 170.00 415259

May 246.00 175.10 454303 245.80 180.10 418189

June 277.00 224.05 305460 272.80 225.25 155536

July 318.65 233.00 248523 326.40 234.50 122695

August 320.00 279.00 157878 314.75 280.00 141513

September 367.00 308.00 229551 367.00 309.00 183248

October 389.90 350.00 204675 390.00 351.05 124781

November 422.95 360.10 176262 424.00 352.50 132042

December 485.00 349.90 600612 485.00 400.10 569941

8.8 Performance of Company’s shares to broad based index (BSE Sensex):

8.9 Address for correspondence:

Registrar & Share Transfer Agents:

M/s. Sharepro Services (India) Pvt. Limited,

A) 13-AB, Samhita Warehousing Complex, Gala No. 52-56 2nd Floor, Sakinaka Tel. Exchange Lane, off Andheri-Kurla Road, Sakinaka, Mumbai-400 072. Tel: 022-6772 0400/6772 0300, Fax: 022-2859 1568, 2850 8927 Email: [email protected] Contact Person: Mrs. Indira Karkera/ Miss Priya E-mail ID under clause 47(f) of the

Listing Agreement : [email protected]

B) Investor Relations: 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai-400 021. Tel.: 022-2288 1568/69, 6613 4700

Fax: 022-22825484

The shareholders having physical shares are requested to ensure that any correspondence for change of address, change of bank mandates etc. should be signed by the first named shareholder. You are further requested to send supporting documents such as proof of residence, copy of PAN card whenever change of address is to be effected.

In case where the shares of the Company are held in electronic form (that is, in dematerialised form), all communications concerning rematerialisation of shares, transfer and transmission, dividends, change of address, furnishing of alterations in bank account details, nominations, ECS credit of dividend amount to shareholders’ bank account or other inquiries should be addressed only to the Depository Participant (DP) with whom demat account is maintained, quoting client ID number and not to the Company or the R&T Agent . This is because once the shares are dematerialised they become fungible i.e., they lose their distinct identity such as the folio number, the certificate number, the distinctive share numbers, etc. and the corresponding credit for number of shares is given to the individual shareholder in his account with the concerned DP.

For any assistance from the Company, members may contact Mr. S. P. Bhattu, Assistant Company Secretary at the registered office of the Company.

Tel. No. 022-22022161/2283 0882

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8.10 Shareholding Pattern as on December 31, 2009

Sr. No.

CategoryNo. of

Shares heldPercentage of Shareholding

A. Promoter's Holding:

Foreign Promoters

i EBITO Chemiebeteiligungen AG 8167080 30.63

ii Clariant International AG 6075000 22.79

iii Clariant Participations AG 2660000 9.98

Sub-Total 16902080 63.40

B. Institutional Investors

i Mutual Funds / UTI 1151551 4.32

ii Financial Institutions / Banks 20067 0.07

iii Insurance Companies 479588 1.80

iv Foreign Institutional Investors 58815 0.22

Sub-Total 1710021 6.41

C. Non-Institutional Investors

i Bodies Corporate 1489332 5.59

ii Individuals

a) individual shareholders holding nominal share capital up to Rs.1 lakh

5748845 21.56

b) individual shareholders holding nominal share capital in excess of Rs. 1 lakh

669395 2.51

iii others

a) Non-Resident (Non-Rep) 72270 0.27

b) Non-Resident (Rep) 48168 0.18

c) Trust 18784 0.07

d) OCB 1850 0.01

Sub-Total 8048644 30.19

TOTAL 26660745 100.00

2,56,09,068 shares of the Company are held in dematerialised form constituting 96.06% of the paid-up capital, as at December 31, 2009. The total number of shareholders as on Benpos date of December 31, 2009 is 30,656.

8.11 Details of Members holding > 1 % of the paid up capital of the Company

Sr. No

Name

As at December 31, 2009

As at December 31, 2008

No. of shares

% No. of shares

%

1. EBITO Chemiebeteiligungen AG 8167080 30.63 8167080 30.63

2. Clariant International AG 6075000 22.79 6075000 22.79

3. Clariant Participations AG 2660000 9.98 2660000 9.98

4. UTI (thru its various schemes) 572000 2.15 566297 2.12

5. Finquest Securities Pvt. Ltd. (Held under 4 folios)

535766 2.01 Nil Nil

6. UTI Master Value Fund 264243 0.99 289071 1.08

8.12 Distribution of shareholdings as at December 31, 2009

No. of equity shares held

Shareholders Equity Shares held

Numbers % No. of shares %

1 – 500 28190 91.956 2836121 10.638

501 – 1000 1436 4.684 1069610 4.012

1001 – 2000 575 1.876 833575 3.127

2001 – 3000 157 0.512 394096 1.478

3001 – 4000 83 0.271 293416 1.101

4001 – 5000 69 0.225 320948 1.204

5001 – 10000 84 0.274 598984 2.247

10001 & above 62 0.202 20313995 76.194

Total 30656 100.000 26660745 100.000

8.13 Dematerialisation of shares and liquidity

Names of Depositories for dematerialisation of equity shares:

Name of the Depository ISIN No.

National Securities Depositories Limited (NSDL) INE492A01029

Central Depository Services (India) Limited (CDSL) INE492A01029

Trading in equity shares of the Company is permitted only in dematerialised form.

8.14 ADRs/GDRs/Warrants The Company has not issued any GDRs/ADRs/Warrants or

any other convertible instruments.

8.15 Plant Locations: (i) The Company’s manufacturing facilities are located at

(a) Balkum Village, Thane-400 608 (Maharashtra)

(b) Kolshet Road, Thane-400 607 (Maharashtra)

(c) 113/114, MIDC, A.V.P.O. Dhatav, Roha, Dist. Raigad-402 116 (Maharashtra)

(d) Kudikadu, P.O., Cuddalore-607 005 (Tamil Nadu)

(e) Singhadivakkam Village, Kanchipuram-631 561 (Tamil Nadu)

(ii) The Company’s wholly owned subsidiary company’s (Chemtreat Composites India Private Limited) plant is located at Village Savaroli Survey No. 109, 110, 112 Kharpada Road, Tal Khalapur, Khopoli Dist. Raigad-410 203 (Maharashtra)

9. Additional Information:9.1 Dividend for the year ended December 31, 2009: The final dividend recommended by the Board for the year

will be paid after approval of shareholders at the forthcoming Annual General Meeting to all those shareholders whose names appear – in respect of shares held in demat form, as beneficial owner, as per details furnished by the depositories as at the end of the business on April 12, 2010 and

Secr-N.indd 28 3/17/2010 10:34:51 AM


In respect of shares held in physical form as members in the register of members of the Company after giving effect to all valid share transfers lodged with the share transfer agent on or before April 12, 2010. The Company will dispatch the dividend warrants on or after April 24, 2010.

9.2 Unpaid / Unclaimed Dividend: In terms of the amended provisions of Section 205C of the

Companies Act, 1956 the Company is obliged to transfer dividends which remain unpaid or unclaimed for the period of seven years from the date of declaration of dividend to the credit of the Investor Education and Protection Fund established by the Central Government. Accordingly, the Company has transferred unpaid/unclaimed dividend up to the financial year 2001-2002 to the fund and no claim shall lie against the Company or the fund in respect of dividends remaining unclaimed or unpaid and transferred to the Fund.

Members are hereby informed that the seven years period for payment of the dividend pertaining to financial year 2002-2003 will expire on 24.07.2010 and thereafter the amount standing to the credit in the said account will be transferred to the ‘Investor Education and Protection Fund’ of the Central Government. Members are therefore requested to encash the dividend at the earliest.

Dates of transfer of unclaimed dividend to the Fund

Financial Year/period Date of PaymentDate of completion of

seven years

2002-2003 25.07.2003 24.07.2010

2003-2004 30.07.2004 29.07.2011

2004-2005 29.07.2005 28.07.2012

2005-2006 27.07.2006 26.07.2013

April-Dec. 2006 19.04.2007 18.04.2014

2007 17.04.2008 16.04.2015

2008 29.04.2009 28.04.2016

2009 (Interim) 24.07.2009 23.07.2016

9.3 Bank Mandate: Electronic Clearing Services (ECS) is a method of payment of

dividend whereby the amount due to investors can directly be credited into their bank accounts, without having to issue paper instruments. It is fast and there is no scope for loss of dividend warrants in transit and possible fraudulent encashment.

In case of shares held in physical form the bank details may be sent to the registrar & share transfer agents. In case of shares held in demat form, the bank details provided by the Depository Participant (DP) with whom the demat account is maintained will be applicable. All previous instructions given by you to the Company in respect of ECS and bank details will stand superseded by the ECS details recorded with your DP.

9.4 Nomination Facility: A member can nominate a person who shall have rights

to shares and/or amount payable in respect of shares registered in his name in the event of his death. This facility is available to the members of the Company. The said form can be obtained from the Company’s Share transfer agent or downloaded from the website of the Company at www.clariant.in

9.5 Consolidation of folios and avoidance of multiple folios:

Members having multiple folios are requested to consolidate their folios into single folio and for this purpose send request along with the original certificates along with a request to the Share Transfer Agent specifying the folio number under which they desire to hold the shares.

9.6 Compliance The Company has complied with all requirements of

regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

10. CEO/CFO Certification The Vice-Chairman & Managing Director and the Director

Finance & Company Secretary have provided annual certificate on financial reporting and internal controls to the Board pursuant to clause 49. They have also provided quarterly certificates on financial results while placing the financial results before the Board pursuant to Clause 41.

On behalf of the Board of Directors

R. A. Shah Chairman

Mumbai, February 19, 2010

Secr-N.indd 29 3/17/2010 10:34:52 AM


AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To The Members of Clariant Chemicals (India) Limited

We have examined the compliance of conditions of Corporate Governance by Clariant Chemicals (India) Limited, for the year ended December 31, 2009 as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and based on the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

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

For Deloitte Haskins & Sells Chartered Accountants

Reg. No. 117365W

A. C. Khanna PartnerMumbai, 19th February, 2010 Membership No.: 17814

Secr-N.indd 30 3/17/2010 10:34:52 AM

31

Auditors’ ReportTo the Members of Clariant Chemicals (India) Limited

1. We have audited the attached Balance Sheet of Clariant Chemicals (India) Limited, as at December 31, 2009 and also the Profit and Loss Account and the 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.

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

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

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

(a) we have obtained all the information and 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 the 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 Companies Act, 1956;

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

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

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

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

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

For Deloitte Haskins & SellsChartered Accountants

Registration No. 117365W

A. C. KhannaPartner

Membership No. 17814

Mumbai: February 19, 2010

Aud-col.indd 31 3/17/2010 10:44:20 AM


Annexure to the Auditors’ Report[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Clariant Chemicals (India) Limited on the financial statements for the year ended December 31, 2009.]

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

(b) The Company has a programme of physical verification of fixed assets. As per the said programme, certain assets were physically verified during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion, fixed assets disposed off during the year were not substantial. Therefore, the provisions of clause 4(i)(c) of the Order are not applicable to the Company.

(ii) (a) The inventories have been physically verified during the year by the management except for stocks lying at third party locations for which confirmations have been obtained and for goods-in-transit. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub-clause (b), (c) and (d) of clause 4(iii) of the Order are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties

covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub-clause (f) and (g) of clause 4(iii) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of a special nature and suitable alternatives do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and services. Further, the basis of our examination and according to the information and explanations given to us, we have neither come across nor have we been informed of any instance of major weaknesses in the aforesaid internal control systems.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts and arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 have been made at the prices which are reasonable having regard to the prevailing market prices at the relevant time except in case of some transactions where alternate source of supply did not exist and therefore, no comparison of prices was possible.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. As informed to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

Aud-col.indd 32 3/17/2010 10:44:20 AM

33Annexure to the Auditors’ Report

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed records have been maintained and the prescribed accounts are in the process of being made up. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) (a) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at December 31, 2009 for a period of more than six months from the date on which they became payable.

(b) According to the records of the Company, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty and Cess as applicable which have not been deposited on account of dispute are as follows:

(Rs. In Lakhs)

Name of Statute(Nature of Dues)

Period towhich theamountRelates

Forum where dispute is pending

Commissio- narate

Appellate authorities & Tribunal

HighCourt

Total Amount

Sales Tax (Tax/ Penalty/ Interest)

1992-93, 2001-02, 2002-03, 2003-04

354.25 – – 354.25

1999-00 – 17.88 – 17.88

1996-97,1997-98, 1998-99

– – 2.27 2.27

Total 354.25 17.88 2.27 374.40

The Central Excise Act (Tax/ Penalty/ Interest)

1994-97, 2000-2001, 2004-2005, 2006- 2007

408.64 – – 408.64

1999-00, 2000-04 –- 33.75 – 33.75

Total 408.64 33.75 – 442.39

ServiceTax

2005-06 0.52 – – 0.52

2004-05 – 5.12 – 5.12

Total 0.52 5.12 – 5.64

IncomeTax (Tax/Interest)

A.Y. 1987-88, 1992-93 , 1994-95, 2000-01, 2001-02, 2003-04,2004-05, 2005-06 & 2006-07

602.23 – – 602.23

A.Y. 1995-96,2000-01, 2003-04

– 248.15 – 248.15

Total 602.23 248.15 – 850.38

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during

the financial year covered by our audit and in the 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 financial institution, banks or debenture holders.

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, no term loans were acquired during the reporting period by the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures. Therefore the provisions of clause 4(xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issue during the year. Therefore, the provisions of clause 4(xx) of the Order are not applicable to the Company.

(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.



A. C. KhannaPartner

Membership No. 17814

Mumbai: February 19, 2010

Aud-col.indd 33 3/17/2010 10:44:20 AM


Balance Sheetas at 31st December, 2009

Schedule31-12-09

Rs. Lakhs31-12-08

Rs. LakhsSOURCES OF FUNDSShareholders’ funds Share capital 1 2666.07 2666.07 Reserves and surplus 2 32113.18 29097.55 34779.25 31763.62Loan funds Unsecured loans 3 204.78 309.07

204.78 309.07Deferred tax liability – Net (See note 6, Schedule 17) — 254.94

34984.03 32327.63APPLICATION OF FUNDSFixed assets 4 Gross block 34975.65 38797.09 Less : Accumulated depreciation and impairment 21085.35 23390.54 Net block 13890.30 15406.55 Capital work-in-progress and advances, etc. 590.72 1053.83

14481.02 16460.38Fixed assets held for disposal (See note 26, Schedule 17) 792.34 —Investments 5 12449.95 5784.47 Deferred tax asset – Net (See note 6, Schedule 17) 275.72 —Current assets, loans and advances Inventories 6 7665.03 10543.98 Sundry debtors 7 14459.63 13210.41 Cash and bank balances 8 1696.62 842.31 Loans and advances 9 6320.49 6397.96

30141.77 30994.66Less : Current liabilities and provisions Liabilities 10 16572.90 12844.86 Provisions 11 6583.87 8067.02

23156.77 20911.88Net current assets 6985.00 10082.78

34984.03 32327.63Notes on balance sheet and profit and loss account 17

For and on behalf of the Board

R. A. Shah Chairman

P. Palm Vice-Chairman & Managing Director

Diwan A. Nanda Director

B. L. Gaggar Director Finance & Company Secretary

Mumbai, 19th February, 2010

Per our report attached


A. C. KhannaPartner


Bal-col.indd 34 3/17/2010 10:43:20 AM

35

Schedule2009

Rs. Lakhs2008

Rs. LakhsINCOME Sales – Gross 97322.24 100145.34 Less : Excise duty 5188.11 8505.87 Sales – Net 92134.13 91639.47 Other income 12 2630.82 2533.68

94764.95 94173.15EXPENDITURE Cost of materials 13 54523.49 58150.05 Personnel cost 14 6158.71 7229.91 Interest (Net) 15 16.67 (18.29) Depreciation/Amortisation 4 1896.35 2251.60 Impairment of fixed assets 4 136.98 728.62 Other expenditure 16 14178.36 15842.89

76910.56 84184.78Less : Service charges recovered 906.74 788.23

76003.82 83396.55PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 18761.13 10776.60Exceptional items (See note 23, Schedule 17) 2450.46 48.00PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 16310.67 10728.60Provision for taxation Current tax 5958.00 3792.00 Deferred tax (530.66) (178.29) Fringe benefit tax 39.00 118.50 (Excess)/Short provision for taxation in respect of earlier years 30.77 248.09PROFIT AFTER TAXATION 10813.56 6748.30Balance brought forward from previous year 1097.40 950.36AVAILABLE FOR APPROPRIATION 11910.96 7698.66APPROPRIATED AS FOLLOWS General reserve 1081.36 674.83 Interim dividend 2666.07 — Proposed dividend (Final) 3999.11 5065.54 Corporate tax on dividend (Interim & Final) 1132.75 860.89 Balance carried to the balance sheet 3031.67 1097.40

11910.96 7698.66Notes on balance sheet and profit and loss account 17Basic and Diluted earnings per share (Rupees) (See note 15, Schedule 17) 40.56 25.31Face value per share (Rupees) 10.00 10.00

Profit and Loss Accountfor the year ended 31st December, 2009


R. A. Shah Chairman





Per our report attached to the Balance Sheet


A. C. KhannaPartner


Bal-col.indd 35 3/17/2010 10:43:20 AM


2009 Rs. Lakhs

2008 Rs. Lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit after exceptional items and before taxation 16310.67 10728.60

Adjustments for :

Depreciation/Amortisation 1896.35 2251.60

Impairment of fixed assets 136.98 728.62

Unrealised foreign exchange (gain)/loss (Net) (32.89) 59.96

Interest income (83.20) (171.67)

Dividend income (407.90) (171.56)

Loss/(profit) on sale of assets (Net) (80.31) (20.66)

Loss/(profit) on sale of investments (Net) (0.21) (0.29)

Provision for doubtful debts/advances (Net) 29.39 200.11

Provision for leave encashment (126.69) 4.52

Provision for ex-gratia gratuity (15.21) 4.24

Provision for gratuity (186.30) 267.80

Interest expenses 99.87 153.38

Assets written-off 100.69 390.63

Operating profit before working capital changes 17641.24 14425.28

Adjustments for :

Trade and other receivables (1050.90) 653.07

Inventories 2878.95 727.06

Trade, other payables and provisions 3693.84 (4447.67)

Cash generated from operations 23163.13 11357.74

Direct taxes paid – (Net of refunds) (6055.45) (3288.52)

Net cash from operating activities 17107.68 8069.22

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets (1005.00) (2669.18)

Sale of fixed assets 138.31 49.71

Purchase of investments (95164.44) (42571.83)

Sale of investments 88499.17 39730.92

Loans given to subsidiary (31.00) (75.00)

Loans repaid by subsidiary 1.00 —

Interest received 83.20 171.67

Dividend received 407.90 171.56

Net Cash used in investing activities (7070.86) (5192.15)

Cash Flow Statementfor the year ended 31st December, 2009

Bal-col.indd 36 3/17/2010 10:43:20 AM

37Cash Flow Statement

2009 Rs. Lakhs

2008 Rs. Lakhs

C. CASH FLOW FROM FINANCING ACTIVITIES :

Repayment of borrowings (104.29) (98.09)

Interest paid (93.33) (147.17)

Dividend/dividend tax paid (8984.89) (3109.75)

Net Cash used in financing activities (9182.51) (3355.01)

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 854.31 (477.94)

CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 842.31 1320.25

CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (See note 3) (Refer Schedule 8) 1696.62 842.31

Notes:

1. The Cash flow has been prepared under the “Indirect Method” as set out in Accounting Standard – 3 on Cash flow statement notified by the Companies (Accounting Standards) Rules, 2006.

2. Direct taxes paid are treated as arising from operating activities and are not bifurcated between investing and financing activities.

3. Cash and cash equivalents at the end of the year include current account balances with banks of Rs. 221.71 lakhs (Previous Year : Rs. 161.63 lakhs) which are restricted in use on account of unclaimed dividend/fixed deposit/interest on fixed deposit.

4. Figures for the previous year have been regrouped wherever necessary to conform to the current year’s classification.


R. A. Shah Chairman







A. C. KhannaPartner


Bal-col.indd 37 3/17/2010 10:43:21 AM


SCHEDULE 1 : SHARE CAPITAL 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Authorised

30000000 equity shares of Rs. 10/- each 3000.00 3000.00

Issued and subscribed

26660745 equity shares of Rs. 10/- each fully paid 2666.07 2666.07

Notes:

Of the above :

(a) 15010745 equity shares issued as fully paid up pursuant to a contract for a consideration other than cash.

(b) 8167080 equity shares are held by EBITO Chemiebeteiligungen AG. 6075000 equity shares are held by Clariant International AG. 2660000 equity shares are held by Clariant Participations AG. The ultimate holding company being Clariant AG, Switzerland.

(c) 6690610 equity shares were allotted as fully paid up bonus shares by capitalisation of Rs. 669.06 lakhs from general reserve.

SCHEDULE 2 : RESERVES AND SURPLUS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Capital reserve

As per last Balance sheet 730.11 730.11

Capital redemption reserve


Securities premium account


Investment allowance reserve


Less : Transfer to general reserve 20.00 —

— 20.00

General reserve


Add : Transfer from Investment allowance reserve 20.00 —

Transfer from Profit and loss account 1081.36 674.83

24668.25 23566.89

Profit and loss account 3031.67 1097.40

32113.18 29097.55

SCHEDULE 3 : UNSECURED LOANS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

From others:

Interest-free sales tax deferral scheme granted by State Industries Promotion Corporation of Tamil Nadu Limited (Repayable within one year Rs. 99.50 lakhs, Previous Year: Rs. 104.29 lakhs) 204.78 309.07

204.78 309.07

Schedulesforming part of the Balance Sheet

Bal-col.indd 38 3/17/2010 10:43:21 AM

39Schedules forming part of the Balance Sheet

SCHEDULE 4 : FIXED ASSETS Rs. Lakhs

GROSS BLOCK DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCK

As at 31-12-08

Additions/ Adjustments

Deductions/ Adjustments

As at 31-12-09

As at 31-12-08


For the year

Impairment (See note 2)

As at 31-12-09

As at 31-12-09

As at 31-12-08

Tangible Assets

Land freehold 145.02 — — 145.02 — — — — — 145.02 145.02

Land leasehold 14.88 — — 14.88 4.50 — 0.16 — 4.66 10.22 10.38

Buildings 6771.07 299.06 4.91 7065.22 2313.36 1.77 171.48 136.98 2620.05 4445.17 4457.71

Plant, machinery, equipment etc. 28909.15 1068.26 5013.19 24964.22 18878.89 4073.89 1550.35 — 16355.35 8608.87 10030.26

Furniture, fixtures and office appliances 2260.06 88.48 148.71 2199.83 1627.14 140.79 137.20 — 1623.55 576.28 632.92

Vehicles 696.91 12.31 122.74 586.48 566.65 122.07 37.16 — 481.74 104.74 130.26

Total 38797.09 1468.11 5289.55 34975.65 23390.54 4338.52 1896.35 136.98 21085.35 13890.30

Previous year 36413.30 3398.81 1015.02 38797.09 21005.66 595.34 2251.60 728.62 23390.54 15406.55

Capital work-in-progress 550.23 1030.37

Advances against capital orders 40.49 23.46

590.72 1053.83

14481.02 16460.38

Notes:

1. Buildings include Rs. 0.12 lakh (Previous Year : Rs. 0.12 lakh) being the cost of shares and bonds in co-operative housing societies.

2. In accordance with the provisions of the Accounting Standard – 28 on Impairment of Assets notified by the Companies (Accounting Standards) Rules 2006, the Company has identified certain fixed assets that were impaired mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly during current year an impairment loss of Rs. 136.98 lakhs in respect of Dyes and Specialty Chemicals segment (Rs. 12.47 lakhs) and Intermediates and Colours segment (Rs. 124.51 lakhs) has been recognised in the profit and loss account. (Previous Year Rs. 728.62 lakhs in respect of Intermediates and Colours segment)

SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Non Trade – Unquoted

Long Term

In Subsidiary Company

500000 (Previous Year: 500000) fully paid equity shares of Rs. 10/- each in Chemtreat Composites India Private Limited 325.00 325.00

Total Long Term 325.00 325.00

Current

In fully paid units of Rs. 10/- each

9825217 (Previous Year : Nil) Birla Sun Life Saving Fund – Daily Dividend 983.19 —

8883589 (Previous Year : Nil) HDFC Treasury Advantage Fund – Whole Sale Fund – Dividend-Daily 891.16 —

4742864 (Previous Year : Nil) HDFC F R I F – STP – Whole Sale Fund – Dividend-Daily 478.12 —

9776175 (Previous Year : Nil) DWS Ultra Short Term Fund – Dividend-Daily 979.37 —

9019717 (Previous Year : Nil) DWS Cash Opportunity Fund – Dividend-Daily 904.16 —

9695701 (Previous Year : Nil) JM Money Manager Fund – Super Plus Plan – Dividend-Daily 970.08 —

4038543 (Previous Year : Nil) IDFC Money Manager Fund – Dividend-Daily 403.91 —

9471776 (Previous Year : Nil) LIC MF Income Plus Fund – Dividend-Daily 947.18 —

9197118 (Previous Year : Nil) LIC MF Saving Plus Fund – Dividend-Daily 919.71 —

9847865 (Previous Year : Nil) LIC MF Floater Fund – Dividend-Daily 984.80 —

Bal-col.indd 39 3/17/2010 10:43:21 AM


SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Nil (Previous Year : 9346248) Birla Sun Life Short Term Fund – Institutional – Daily Dividend — 935.14

Nil (Previous Year : 7999333) Fidelity Cash Fund – Institutional – Daily Dividend — 800.13

Nil (Previous Year : 7754587) HDFC Liquid Fund Premium Plan – Dividend-Daily — 950.70

Nil (Previous Year : 5571131) Reliance Medium Term Fund – Daily Dividend — 952.41


863340 (Previous Year : Nil) ICICI Prudential Flexible Income Premium Plan Fund – Daily Dividend 912.85 —

957923 (Previous Year : Nil) ICICI Prudential Floating Rate Plan D – Daily Dividiend 958.12 —


91249 (Previous Year : Nil) Reliance Money Manager Fund – Institutional Plan – Daily Dividend 913.53 —

65341 (Previous Year : 89206) DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 653.77 892.06

22483 (Previous Year : Nil) UTI Floating Rate Fund STP – Daily Dividend 225.00 —

Nil (Previous Year : 83357) TATA Liquid Super High Investment Fund – Daily Dividend — 929.03

Total Current 12124.95 5459.47

Total Investments – Unquoted 12449.95 5784.47

Following are the Investments which have been purchased and sold during the year :

January to December 2009

Nos. Rs. Lakhs

Non trade Current – unquoted


Reliance Medium Term Fund DDR 9798769 1675.15

Reliance Liquid Fund Treasury Plan I.P. DDR 23021439 3519.33

Kotak Liquid Fund : Institutional Premium Plan DDR 26435819 3232.60

Kotak Floater Long Term – Daily Dividend 19001414 1915.30

Kotak Flexi Debt Fund – Daily Dividend 9537367 958.27

Birla Sun Life Saving Fund Inst DDR 11422101 1142.99

Birla Sun Life Short Term Fund DDR 166799 16.69

Birla Sun Life Cash Plus Inst DDR 30607458 3066.71

JM High Liquidiy Fund – Super Inst Plan Daily Dividend 32701851 3275.58

JM Money Manager Fund – Super Plus Plan Daily Dividend 24681333 2469.44

TATA Floater Fund – Daily Dividend 22027430 2210.58

DWS Insta Cash Plus Fund – Institutional Plan DDR 30962987 3109.02

DWS Ultra Short Term Fund – Institutional Plan DDR 12471955 1249.16

ICICI Prudential MF Plan Super Institutional Plan Daily Dividend 38359058 3836.40

ICICI Prudential MF Flexible Income Plan – Premium Daily Dividend 17761278 1877.99

ICICI Prudential MF Floating Rate Fund Daily Dividend 9896815 989.89

Bal-col.indd 40 3/17/2010 10:43:21 AM


January to December 2009

Nos. Rs. Lakhs

HDFC Cash Mangement Fund – Saving Plus – DDR 19417490 2065.32

HDFC Cash Mangement Fund – Treasury Advantage Plan – Wholesale DDR 24687274 2476.50

HDFC F R I F STF – Wholesale DDR 4959875 500.00

HDFC Liquid Fund Premium Plan DDR 31033067 3804.59

Canara Robeco Liquid Fund – I.P. – Daily Dividend 14698674 1475.89

Canara Robeco Treasury Advantage Fund – I.P. – Daily Dividend 3870373 480.20

Fidelity Cash Fund – I.P. – Daily Dividend 10815492 1081.82

Fidelity Ultra Short Term Debt Fund – I.P. – Daily Dividend 19065377 1906.82

IDFC Money Treasury Fund – I.P.C. – Daily Dividend 13954500 1395.66

IDFC Money Treasury Fund – I.P.B. – Daily Dividend 29175520 2938.06

IDFC Cash Fund – Super I.P.C – Daily Dividend 8998490 900.07

IDFC Cash Fund – I.P. – Daily Dividend 37097892 3925.55

SBI – SHF – Ultra Short Term Fund – I.P. – Daily Dividend 17816624 1782.55

SBI – Magnum Insta Cash Fund – Daily Dividend 15543795 2603.63

LIC Liquid Fund – DDR 40459389 4442.48

LIC MF Income Plus Fund – DDR 8641648 864.16

LIC MF Floater Rate S T Fund – DDR 16254850 1625.49

FORTIS Money Plus Inst Plan Fund – DDR 10382401 1038.56

FORTIS Overnight Fund – DDR 10287689 1029.08

In fully paid units of Rs. 100 /- each

ICICI Prudential MF Liquid Plan Super Institutional Plan – Daily Dividend 955874 956.08

In fully paid units of Rs. 1000 /- each

TATA Treasury Manager Fund Ship – Daily Dividend 90536 914.70

TATA Liquidity Management Ship Fund – Daily Dividend 182296 2031.73

DSP BlackRock Floating Rate Fund – I.P. – Daily Dividend 151974 1520.55

DSP BlackRock Cash Manager Fund – I.P. – Daily Dividend 214595 2146.17

UTI Treasury Advantage Fund – I.P. – Daily Dividend 169324 1693.44

UTI Liquid Cash Plan – I.P. – Daily Dividend 234959 2395.29

UTI Floating Rate Fund STP DDR 49961 500.00

Following are the Investments which have been purchased and sold during the year : (Contd.)

Bal-col.indd 41 3/17/2010 10:43:22 AM


SCHEDULE 6 : INVENTORIES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

At lower of cost and net realisable value (As certified by the Management)

Stores and spare parts 187.66 241.35

Raw materials 2114.96 3281.75

Packing materials 104.13 98.56

Finished goods 4422.91 5718.63

Work-in-progress 835.37 1203.69

7665.03 10543.98

SCHEDULE 7 : SUNDRY DEBTORS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Secured (Considered good)

Over six months 5.68 9.02

Other debts 1570.88 1349.06

1576.56 1358.08

Unsecured (Considered good, unless otherwise stated)

Over six months (Including doubtful debts Rs. 246.31 lakhs; Previous Year : Rs. 280.89 lakhs) 328.62 396.73

Other debts 12800.76 11736.49

13129.38 12133.22

Less : Provision for doubtful debts 246.31 280.89

14459.63 13210.41

SCHEDULE 8 : CASH AND BANK BALANCES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Cash on hand 4.18 6.63

Cheques on hand 49.27 82.05

With scheduled banks:

On current accounts 1010.83 582.13

On fixed deposit accounts 632.34 171.50

1643.17 753.63

1696.62 842.31

Bal-col.indd 42 3/17/2010 10:43:22 AM


SCHEDULE 9 : LOANS AND ADVANCES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

(Unsecured – Considered good, unless otherwise stated)

Advances and loans to the subsidiary (See note 25, Schedule 17) 688.35 709.47

Advances recoverable in cash or in kind or for value to be received 3517.98 3672.17

Less : Provision for doubtful advances 63.97 —

3454.01 3672.17

VAT set off admissible 99.67 52.51

Advance payment of Income tax (Net of provision for taxation) 1768.95 1648.55

Balances with customs and excise on current account 309.51 315.26

6320.49 6397.96

SCHEDULE 10 : CURRENT LIABILITIES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Sundry creditors :

Due to micro enterprises and small enterprises (See Note 7, Schedule 17) 361.14 82.25

Due to others 14127.02 11157.13

14488.16 11239.38

Deposits 1863.03 1443.85

Unpaid dividends* 221.61 160.90

Unclaimed fixed deposits* 0.06 0.15

Unpaid interest on matured fixed deposits* 0.04 0.58

16572.90 12844.86

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

SCHEDULE 11 : PROVISIONS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Employee benefits:

Leave encashment 365.02 491.71

Gratuity 200.73 387.03

Ex-gratia gratuity 69.21 84.42

Others:

Provision for taxation (Net of advance payment of Income tax) 1270.15 1177.43

Proposed dividend (Final) 3999.11 5065.54

Corporate tax on proposed dividend (Final) 679.65 860.89

6583.87 8067.02

Bal-col.indd 43 3/17/2010 10:43:22 AM


SCHEDULE 12 : OTHER INCOME 2009 Rs. Lakhs

2008 Rs. Lakhs

Dividend on current non-trade investments 407.90 171.56

Export incentives 420.13 482.72

Profit on sale of fixed assets (Net) 80.31 20.66

Cash discounts 39.40 36.15

Rental income 398.25 364.66

Indenting commission 589.29 634.52

Profit on sale of current investments (Net) 0.21 0.29

Miscellaneous 695.33 823.12

2630.82 2533.68

SCHEDULE 13 : COST OF MATERIALS 2009 Rs. Lakhs

2008 Rs. Lakhs

Raw materials consumed 38450.19 42048.52

Packing materials consumed 2275.54 2204.63

Purchases of finished goods 12133.72 13003.39

(Increase)/Decrease in stocks of finished goods and work-in-progress :

Opening stock



6922.32 7815.83

Less : Closing stock



5258.28 6922.32

1664.04 893.51

54523.49 58150.05

SCHEDULE 14 : PERSONNEL COST 2009 Rs. Lakhs

2008 Rs. Lakhs

Salaries, wages, bonus, etc. 4677.67 5256.71

Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 551.95 1028.20

Welfare expenses 929.09 945.00

6158.71 7229.91

Schedulesforming part of the Profit and Loss Account

Bal-col.indd 44 3/17/2010 10:43:22 AM

45Schedules forming part of the Profit & Loss Account

SCHEDULE 15 : INTEREST (NET) 2009 Rs. Lakhs

2008 Rs. Lakhs

Interest Paid

Others 99.87 153.38

99.87 153.38

Less : Interest received (Gross) :

Others (Tax deducted at source Rs. 12.69 Lakhs; Previous Year : Rs. 7.71 Lakhs) 83.20 171.67

83.20 171.67

16.67 (18.29)

SCHEDULE 16 : OTHER EXPENDITURE 2009 Rs. Lakhs

2008 Rs. Lakhs

Stores and spare parts etc. consumed 605.63 597.94

Repairs and maintenance:

Plant and machinery 707.88 886.37

Buildings 218.64 216.51

Others 153.33 176.59

Power and fuel 4574.37 4464.92

Rent (including lease payments) (See note 16, Schedule 17) 555.90 582.10

Rates and taxes (including water charges) 516.03 658.00

Insurance 69.27 109.83

Clearing, forwarding and transport 1309.07 1490.65

Travelling and conveyance 873.15 962.82

Commission 175.82 250.64

Cash discount 11.76 22.37

Other discounts on sales 684.65 1324.79



Excise duty (324.39) (376.11)

Exchange loss (Net) 162.28 172.63

Miscellaneous (See note 18, Schedule 17) 3754.89 3712.10

14178.36 15842.89

Bal-col.indd 45 3/17/2010 10:43:22 AM


NotesSCHEDULE 17 : Notes on the Balance Sheet and Profit and Loss Account for the year ended 31st December, 2009

1. Significant Accounting Policies

The financial statements are prepared at historical cost on the accrual basis of accounting and in accordance with the standards on accounting notified by the Companies (Accounting Standards) Rules, 2006 and referred to in Section 211(3C) of the Companies Act, 1956.

The significant accounting policies are as follows :

I. Revenue Recognition

The Company recognises sale of goods on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales are net of excise duty, sales tax and trade discounts, wherever applicable.

Dividend income on investments is accounted for when the right to receive the payment is established.

II. Excise Duty

Excise duty payable on products is accounted for at the time of despatch of goods from the factories but is accrued for stocks held at the year end.

Excise Duty related to the difference between the closing stock and opening stock of finished goods has been recognised separately in the profit and loss account under schedule of ‘Other Expenditure’.

III. Research and Development

Revenue expenditure on research and development is written off in the profit and loss account in the year in which it is incurred. Capital expenditure on research and development is treated in the same way as expenditure on fixed assets.

IV. Employee Benefits

(a) Short term employee benefit obligations are estimated and provided for.

(b) Post employment benefits and other long term employee benefits :

Defined contribution plans :

Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and/or statute and charged to revenue.

Defined benefit plans and compensated absences :

Company’s liability towards gratuity, ex-gratia gratuity and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in revenue.

V. Voluntary Retirement Scheme

Expenditure incurred on voluntary retirement scheme is charged to revenue in the year in which it is incurred.

VI. Fixed Assets and Depreciation/Amortisation

(a) All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowed for acquisition of qualifying assets for the year upto the date the assets are put to use is included in cost.

(b) The cost of leasehold land is amortised over the period of the lease.

(c) Intangible assets are being amortised equally over a period of three years.

(d) Depreciation has been calculated on the straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except for :

(i) certain items of furniture, fixture, air conditioners, plant, machinery and equipment on which a depreciation rate of 20% on straight line method is applied,

Notes.indd 46 3/17/2010 11:53:40 AM

47Notes

(ii) electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDP equipments including personal computers and printers on which depreciation rate of 25% on straight line method is applied,

(iii) Motor Cars on which depreciation rate of 25% on straight line method is applied.

(e) Fixed Assets held for disposal are stated at lower of net book value and net realisable value.

VII. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. Previously recognised impairment loss is further provided or reversed depending on changes in circumstances.

VIII. Inventories

Inventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventories is generally arrived at on the following basis :

Raw materials, packing materials, trading items and stores and spares – Weighted average cost

Finished goods and work-in-progress – Absorption costing at works cost

IX. Sundry Debtors/Loans and Advances

Sundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.

X. Investments

Long term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are stated at the lower of cost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.

XI. Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.

XII. Foreign Currency Translations

(a) Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting year. In respect of items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation of such a forward exchange contract is recognised as income or expense for the period. Foreign currency transactions are accounted at the rate prevailing on the date of transaction.

(b) Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.

(c) Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account.

XIII. Income Tax

Income-tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respect of the estimated taxable income for the year. The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted tax rates. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation/liabilities.

XIV. Contingencies/Provisions

Provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions except in respect of employee benefits are not discounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

Notes.indd 47 3/17/2010 11:53:40 AM


2. Segment Information for the year ended 31st December, 2009 (As required by Accounting Standard (AS) – 17 Segment Reporting) :

(a) The Company is organised into two primary business segments mainly :

(i) Intermediates and Colours : Includes pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals and masterbatches for plastics and nylon fibers.

(ii) Dyes and Specialty Chemicals : Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals.

(b) The secondary segments of the Company are geographical segments mainly :

(i) India

(ii) Outside India

(c) Segments have been identified and reported taking into account the nature of products and services, the differing risk and returns, the organisation structure, and the internal financial reporting system.

(d) (i) Segment Revenue and Results :

The expenses which are not directly attributable to the business segment are shown as unallocated corporate cost.

(ii) Segment assets and liabilities :

Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors and inventories. Segment liabilities primarily include creditors and other liabilities.

(iii) Assets and liabilities that cannot be allocated among the segments are shown as a part of unallocable corporate assets and liabilities respectively.

Information about Primary Business Segments : (Contd.)

2009Rs. Lakhs

2008Rs. Lakhs

Inter- mediates

& Colours*

Dyes and Specialty

Chemicals

Total Inter- mediates

& Colours*

Dyes and Specialty

Chemicals

Total

Revenue (Net)

External Sales/Revenue 39266.95 52867.18 92134.13 40169.07 51470.40 91639.47

Results

Segment Results 8477.04 10694.37 19171.41 4704.42 7026.57 11730.99

Unallocated Corporate Expenses (Net) (801.51) (1144.24)

Operating Profits 18369.90 10586.75

Interest Income/Dividend income 491.10 343.23

Interest Expenses (99.87) (153.38)

Profit Before Exceptional Items and Taxation 18761.13 10776.60

Exceptional Items (See note 23, Schedule 17) (2450.46) (48.00)

Profit Before Taxation After Exceptional Items 16310.67 10728.60

Current Tax/Deferred Tax (5427.34) (3613.71)

Fringe benefit Tax (39.00) (118.50)

Short provision for taxation in respect of earlier years (30.77) (248.09)

Profit After Tax 10813.56 6748.30

Other Information

Segment Assets 19429.34 19802.95 39232.29 20989.52 21564.60 42554.12

Unallocated Corporate Assets 16863.84 9036.84

Total Assets 56096.13 51590.96

Segment Liabilities 6597.21 8997.45 15594.66 4585.83 8026.18 12612.01

Unallocated Corporate Liabilities 1817.98 1505.08

Total Liabilities 17412.64 14117.09

Notes.indd 48 3/17/2010 11:53:40 AM

49Notes

Information about Primary Business Segments : (Contd.)

2009Rs. Lakhs

2008Rs. Lakhs

Inter- mediates

& Colours*

Dyes and Specialty

Chemicals

Total Inter- mediates

& Colours*

Dyes and Specialty

Chemicals

Total

Capital Expenditure 668.46 322.11 990.57 1413.84 1220.14 2633.98

Unallocated Corporate Capital Expenditure 14.43 35.20

Total Capital Expenditure 1005.00 2669.18 Depreciation/Amortisation 1008.70 818.63 1827.33 1132.43 1032.82 2165.25 Impairment of Fixed Assets 124.51 12.47 136.98 728.62 — 728.62 Unallocated Corporate Depreciation 69.02 86.35 Total Depreciation/Amortisation/Impairment 2033.33 2980.22 Non Cash Expenses other than Depreciation/Amortisation/Impairment 61.72 63.93 125.65 541.04 296.07 837.11Unallocated Corporate Non Cash Expenses other than Depreciation/Amortisation/Impairment 64.28 33.20 Total Non Cash Expenses other than Depreciation/Amortisation/Impairment 189.93 870.31

Information about Secondary Segments :

2009Rs. Lakhs

2008Rs. Lakhs

India Outside India

Total India Outside India

Total

External Sales 75032.64 17101.49 92134.13 72991.30 18648.17 91639.47 Segment Assets 35612.25 3620.04 39232.29 39578.46 2975.66 42554.12 Additions to Fixed Assets 990.57 — 990.57 2633.98 — 2633.98

Notes :

1. Total Assets exclude the following :

(a) Advance payment of Income Tax Rs. 1768.95 lakhs (Rs. 1648.55 lakhs)

(b) Deferred Tax Assets (Net) Rs. 275.72 lakhs (Rs. Nil)

2. Total Liabilities exclude the following :

(a) Proposed Dividend Rs. 3999.11 lakhs (Rs. 5065.54 lakhs)

(b) Corporate Tax on proposed dividend Rs. 679.65 lakhs (Rs. 860.89 lakhs)

(c) Provision for Taxation Rs. 1270.15 lakhs (Rs. 1177.43 lakhs)

(d) Deferred Tax Liability (Net) Rs. Nil (Rs. 254.94 lakhs)

* Products hitherto reported under “Masterbatches” segment is now reported under “Intermediates & Colours” segment since the products are similar in nature.

3. Related Party Disclosure as required by AS-18 “Related Party Disclosures” are given below :

Relationship :

(a) Holding Company :

EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, together hold 63.40% equity shares in the Company, the ultimate holding company being Clariant AG, Switzerland.

(b) Subsidiary of the Company :

The Company has subsidiary Chemtreat Composites India Pvt. Ltd. – 100% shareholding.

Notes.indd 49 3/17/2010 11:53:41 AM


(c) Other related parties in the Clariant group where common control exists and with whom the company has transactions :

Fellow Subsidiary Companies :Clariant (Argentina) SA Clariant Masterbatches (Italia) S.p.A.Clariant (Australia) Pty. Ltd. Clariant Masterbatches (Shanghai) Ltd.Clariant (Canada) Inc. Clariant Masterbatches (Thailand) Ltd.Clariant (China) Ltd. Clariant Masterbatches Benelux SAClariant (Colombia) SA Clariant Masterbatches HuningueClariant (Egypt) SAE Clariant Masterbatches Ireland LimitedClariant (Gulf) FZE Clariant Masterbatches Norden ABClariant (Japan) K.K. Clariant Masterbatches UK Ltd.Clariant (Korea) Ltd. Clariant Oil Services UK Ltd.Clariant (Malaysia) Sdn Bhd Clariant Pigments (Korea) Ltd.Clariant (Maroc) S.A. Clariant Pigments (Tianjin) Ltd.Clariant (Mexico) S.A. de C.V. Clariant Prodotti (Italia) S.p.A.Clariant (Pakistan) Ltd. Clariant Production (France)Clariant (Singapore) Pte. Ltd. Clariant Production UK Ltd.Clariant (Thailand) Ltd. Clariant Produkte (Deutschland) GmbHClariant (Tianjin) Ltd. Clariant Produkte (Schweiz) AGClariant (Uruguay) SA Clariant S.A.Clariant Chemicals (China) Ltd. Clariant Southern Africa (Pty.) Ltd.Clariant Chemicals (Taiwan) Co., Ltd. Clariant Specialty Chemicals (Zhenjiang) Co., Ltd.Clariant Colorquímica (Chile) Ltd. Clariant Specialty Fine Chemicals (France)Clariant Corporation Clariant Trading (China) Ltd.Clariant Distribution UK Ltd. Clariant Venezuela, S.A.Clariant Distribuzione (Italia) S.p.A. Dick Peters B.V.Clariant Export AG K.J. QuinnClariant Ibérica Producción S.A. PT Clariant IndonesiaClariant Masterbatch Ibérica S.A. Clariant (Türkiye) Boya ve Kimyevi Maddeler Sanayi ve Ticaret A.S.Clariant Masterbatches (Deutschland) GmbH

(d) Key Management Personnel :H. Meier : Vice-Chairman & Managing Director (upto 31.12.2009)

During the year following transactions were entered into with related parties : (Contd.)(i) Holding Company, Subsidiary Company and Fellow Subsidiaries : (Contd.)

2009 Rs. Lakhs

2008 Rs. Lakhs

Holding Company :Transactions during the year :Clariant International AG Sale of goods 1501.15 1742.65 Purchase of goods 9234.75 7673.84 Services rendered 377.62 324.08 Services received 699.34 644.13 Dividend paid 1761.75 607.50 Expenses recovered 1.51 19.46EBITO Chemiebeteiligungen AG Dividend Paid 2368.46 816.71Clariant Participations AG Dividend Paid 771.40 266.00Balances outstanding as at the year end : Amount payable 1142.51 984.03 Amount receivable 449.12 676.53Subsidiary Company :Transactions during the year :Chemtreat Composites India Pvt. Ltd. Sale of goods — 0.41 Sale of capital goods — 16.87 Purchase of goods — 0.20 Services rendered 115.94 115.00 Loan given during the year 31.00 75.00 Loan repaid during the year 1.00 — Amount receivable 688.35 709.47

Notes.indd 50 3/17/2010 11:53:41 AM

51Notes

During the year following transactions were entered into with related parties : (Contd.)(i) Holding Company, Subsidiary Company and Fellow Subsidiaries : (Contd.)

2009 Rs. Lakhs

2008 Rs. Lakhs

Fellow Subsidiaries :Transactions during the year :Sale of goods Clariant Produkte (Deutschland) GmbH 1419.66 2338.86 Clariant Corporation 1157.42 2158.91 Clariant (China) Ltd. 2895.33 1524.41 PT Clariant Indonesia 1170.42 811.89 Others 4369.00 3944.64Purchase of goods Clariant (Tianjin) Ltd. 51.95 170.67 Clariant (China) Ltd. 771.38 1008.24 Clariant Corporation 44.82 127.58 Others 474.29 211.87Purchase of capital goods Clariant Masterbatches (Deutschland) GmbH 5.27 170.08 Clariant Masterbatches (Italia) S.p.A. 10.00 23.34 Clariant Production UK Ltd. 2.97 — Sale of capital goods Clariant Produkte (Deutschland) GmbH 50.47 — Services rendered and others Clariant Export AG 308.38 283.67 Clariant Produkte (Deutschland) GmbH 0.54 70.55 Others 40.52 44.70Expenses recovered Clariant Produkte (Deutschland) GmbH — 4.49 PT Clariant Indonesia 0.22 — Clariant (Singapore) Pte. Ltd. 0.05 — Others — 0.78Services received and others PT Clariant Indonesia 18.49 8.19 Clariant (Singapore) Pte. Ltd. 20.67 29.65 Clariant Southern Africa (Pty.) Ltd. 27.35 8.86 Clariant Produkte (Deutschland) GmbH — 8.93 Clariant S.A. — 10.51 Clariant (Gulf) FZE 11.37 2.77 Others 16.55 17.83Expenses reimbursed PT Clariant Indonesia 0.76 — Clariant (Malaysia) Sdn Bhd 1.63 — Balances outstanding as at the year end : Amount payable 424.20 520.37 Amount receivable 2453.27 1441.32

(ii) Key Management Personnel :

Remuneration 217.09 164.97Payable balance 67.58 26.75

Notes.indd 51 3/17/2010 11:53:41 AM


4. Contingent liabilities not provided for :31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

I. (a) in respect of income tax matters decided against the Company, in respect of which the Company is in further appeal 1458.40 856.16 decided in favour of the Company against which the department is in appeal 14.78 14.78(b) in respect of sales tax matters 578.58 494.22(c) in respect of excise matters 448.03 455.66(d) in respect of bills of exchange discounted with banks

[since realised Rs. 778.63 lakhs (Rs. 17.73 lakhs)]1119.58 29.60

(e) Other matters in dispute 2.25 2.25 (f) Disputed Labour matters – Amount not ascertainedIn respect of items (a) to (c), (e) & (f) future cash outflows in respect of contingent liabilities is determinable only on receipt of judgements pending at various forums/authorities.

II. On 15th February 2005, the Company had received an order of the Tahsildar, Thane demanding Rs. 120.70 lakhs for the lease of land to Thane Municipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing against which the Company had filed a writ petition on 23rd February 2005 before the Bombay High Court. The Hon’ble High Court has granted interim stay in terms of the petition on 14th July 2005.

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

5. Estimated amount of contracts remaining to be executed on capital account and not provided for 134.25 148.31

6. Deferred Taxes :The major components of deferred tax assets and deferred tax liabilities are set out below :

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

Deferred Tax Assets(a) Provision for doubtful debts 105.50 95.50(b) Provision for retirement benefits 215.89 327.47(c) Expenses allowable for tax purposes when paid 53.54 53.54(d) Integration expenses 15.74 78.70(e) Payment/Provision for Voluntary retirement scheme 1184.64 552.46(f) Others — 1.23

1575.31 1108.90Deferred Tax LiabilitiesDepreciation/Amortisation/Impairment (1299.59) (1363.84)Deferred Tax Assets/(Liabilities) – Net 275.72 (254.94)

7. Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) are given as follows :

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

(a) Principal amount due 361.14 82.25 Interest due on the above — —

(b) Interest paid during the year beyond the appointed day — — (c) Amount of interest due and payable for the period of delay in making payment without

adding the interest specified under the Act — — (d) Amount of interest accrued and remaining unpaid at the end of the year — — (e) Amount of further interest remaining due and payable even in the succeeding years,

untill such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under Section 23 of the Act — —

The above information and that given in Schedule-10 ‘Current Liabilities’ regarding micro enterprises and small enterprises has been determined on the basis of information available with the Company. This has been relied upon by the auditors. No Interest has been accrued for delayed payments, if any.

Notes.indd 52 3/17/2010 11:53:41 AM

53Notes

8. Disclosure in respect of Derivative Instruments : The Company uses Forward Exchange Contracts to hedge its exposure in foreign currency. The information on derivative instruments is as follows :

31-12-2009 31-12-2008Amount in

foreign currencyAmount

Rs. LakhsAmount in

foreign currencyAmount

Rs. Lakhs(a) Forward Exchange Contracts outstanding as at

CurrencyUSD/INR (Sale) 750000 350.53 500000 251.03 EUR/INR (Purchase) 200000 135.60 — —

(b) Foreign currency exposures not covered by a derivative instrument(i) Amount receivable on account of export of goods and services : Currency USD 7195779 3354.49 5653335 2743.73 EUR 207550 139.49 124555 85.12 CHF 278569 126.06 320046 146.81

3620.04 2975.66(ii) Amount payable on account of import of goods and services : Currency USD 1813887 843.96 2366286 1144.07 EUR 1598195 1074.12 1618387 1106.89 CHF 352103 159.33 337817 154.96 GBP — — 14742 10.38

2077.41 2416.30

9. (a) Amount paid/payable by the Company to Directors (including Managing Director) as remuneration for services rendered in any capacity :

2009 Rs. Lakhs

2008 Rs. Lakhs

Directors’ sitting fees 1.45 0.90Salaries 137.76 136.17Commission 36.75 34.75*Compensation for loss of office 40.83 — Provident fund 11.35 1.89 Other perquisites and benefits in cash or in kind 0.40 0.16

228.54 173.87* Actual paid during the year Rs. 25.49 lakhs and Rs. 9.26 lakhs reversed during the year.

(b) Computation of net profit for commission payable to the Directors in accordance with Section 198 of the Companies Act, 1956 :

2009 Rs. Lakhs

2008 Rs. Lakhs

Profit after tax as per profit and loss account 10813.56 6748.30Add : Provision for taxation-Net 5497.11 3980.30 Managerial remuneration 228.54 173.87 Wealth tax 2.50 5.00 Voluntary retirement scheme compensation 2810.46 48.00 Impairment of fixed assets 136.98 728.62 Provision for doubtful debts/advances (net) 29.39 200.11

8704.98 5135.9019518.54 11884.20

Less : Profit on sale of investments 0.21 0.29 Income from sale of flexible laminating adhesives business 360.00 — Capital Profit on sale of fixed assets 48.88 9.93

409.09 10.22Net profit as per Section 198 19109.45 11873.98Commission :To Vice-Chairman & Managing Director Restricted to sum as determined by the Board of Directors. 26.75 26.75*To Directors who are not in whole-time employment of the Company @ 1% of net profit i.e. Rs. 191.09 lakhs (Rs. 118.74 lakhs) Restricted to sum as determined by the Board of Directors. 10.00 8.00

36.75 34.75* Actual paid during the year Rs. 17.49 lakhs

Notes.indd 53 3/17/2010 11:53:42 AM


10. Capacities and production : 2009 2008

Class of goods Annual Installed Capacity

Production

Annual Installed Capacity

Production M. Tonnes # M. Tonnes *# M. Tonnes # M. Tonnes *#

(a) Intermediates and Colours 28027 15690 29455 20934(b) Dyes and Specialty Chemicals 66660 50201 63070 42979

* Excluding captive consumption # At different concentrations

Notes : 1. The classification between the class of goods and the installed capacities have been certified by the Vice-Chairman & Managing

Director on which the auditors have placed reliance, this being a technical matter. 2. Licensed capacity per annum not indicated due to the abolition of Industrial Licenses as per Notification No. 477(E) dated 25th July, 1991

issued under The Industries (Development and Regulations) Act, 1951.

11. Purchase of finished goods : 2009 2008

Class of goods Quantity Value Quantity ValueM. Tonnes * Rs. Lakhs M. Tonnes * Rs. Lakhs

Trading Items :Dyes, Chemicals, Pigments, Masterbatches, etc. 7241 12133.72 7528 13003.39

* Includes 532 M. Tonnes (797 M. Tonnes) used for captive consumption.

12. Raw materials consumed : 2009 2008

Quantity Value Quantity ValueM. Tonnes Rs. Lakhs M. Tonnes Rs. Lakhs

(a) Acetic acid glacial 9777 2741.79 9831 3139.24(b) Others (None of the items individually

exceed 10% of the total value of raw materials consumed)

35708.40 38909.28

38450.19 42048.52

Note : Raw materials consumed have been arrived at after write down of certain items and excess/shortage on physical verification.

13. Consumption of raw materials : 2009 2008

% of total Value % of total ValueConsumption Rs. Lakhs Consumption Rs. Lakhs

(a) Raw materials : Imported 33.70 12956.32 31.79 13365.31 Indigenous 66.30 25493.87 68.21 28683.21 100.00 38450.19 100.00 42048.52(b) Components and spare parts referred to in Paragraph 4D (c) of Schedule VI of the Companies Act, 1956 are assumed to be incorporated

in the goods produced and not those used for maintenance of plant and machinery.

14. Sales, Opening and Closing Stock :Class of goods Opening Stock Closing Stock Sales (inclusive of

excise duty)Quantity

M. TonnesValue

Rs. LakhsQuantity

M. TonnesValue

Rs. LakhsQuantity

M. TonnesValue

Rs. Lakhs(a) Intermediates and Colours 777 2774.40 564 1651.62 15903 39838.43

(770) (2382.95) (777) (2774.40) (20927) (43478.44)(b) Dyes and Specialty Chemicals 1617 1458.51 1860 1265.37 49958 42855.95

(2903) (2327.94) (1617) (1458.51) (44265) (40773.80)(c) Trading items (including dyes, chemicals,

pigments, masterbatches, etc.) 828 1485.72 889 1505.92 6648 14627.86 (1171) (1914.75) (828) (1485.72) (7074) (15893.10)

5718.63 4422.91 97322.24 (6625.64) (5718.63) (100145.34)

Notes.indd 54 3/17/2010 11:53:42 AM

55Notes

2009 Rs. Lakhs

2008 Rs. Lakhs

15. Earnings per share :(a) Net profit after taxation 10813.56 6748.30(b) Number of equity shares outstanding 26660745 26660745(c) Basic and Diluted earnings per share (Rupees) 40.56 25.31(d) Face value per share (Rupees) 10.00 10.00

16. Assets taken on lease on or after 1st April, 2001 :(a) In respect of operating leases, where lease agreements have been formally entered into,

lease payments recognised in the profit and loss account for the year are as follows. Office premises, vehicles and computers 382.43 377.91

(b) There are no restrictions such as those concerning dividends, additional debt and further leasing, imposed by the lease agreements entered into by the Company.

(c) Contingent rent payments in respect of vehicles are dependent upon the excess of actual usage, if any, over stipulated usage.

(d) The total of future minimum lease payments under non-cancellable operating leases are as follows :

For a period not later than one year 285.05 326.65 For a period later than one year and not later than five years 254.37 343.68 Total 539.42 670.33

17. Expenditure on Research and Development :(a) Capital expenditure 3.36 9.93(b) Revenue expenditure charged to profit and loss account 224.20 323.29

227.56 333.22

18. Miscellaneous Expenses in Schedule 16 : Other expenditure include :Auditors’ remuneration and expenses : (Excluding Service tax)(a) Audit fees 22.00 22.00(b) Company law matters 0.15 — (c) Taxation services 0.23 —(d) Other services 28.20 32.25(e) Out-of-pocket expenses 0.45 0.11

51.03 54.36

19. Value of imports (C.I.F.) :(a) Raw materials and trading items 16908.62 19144.01(b) Components and spare parts 10.87 11.28(c) Capital goods 104.49 394.19

20. Expenditure in foreign currency (subject to deduction of tax where applicable) :(a) Commission 177.65 142.98(b) Interest 6.58 57.22(c) Others (includes exchange loss) 1579.68 1483.83

21. Remittance in foreign currency on account of dividend :Number of non-resident shareholders where direct remittances have been made by the Company 3 3Number of shares on which dividend is remitted 16902080 16902080Year to which dividend relates2009 (Interim) 1690.21 —2008 (Final) 3211.40 — 2007 (Final) — 1690.21

22. Earnings in foreign exchange :(a) Exports (F.O.B.) 16612.73 18185.95(b) Know-how 132.71 155.09(c) Sale of capital goods 50.47 —(d) Others (insurance, freight, commission, claims, exchange gain etc.) 1268.50 1392.98

23. Exceptional items in Profit & Loss Account include :Termination benefits to Employees 2810.46 48.00Income from sale of flexible laminating adhesives business (360.00) —

2450.46 48.00

Notes.indd 55 3/17/2010 11:53:42 AM


24. Employee Benefits :

2009 Rs. Lakhs

2008 Rs. Lakhs

Funded Unfunded Funded Unfunded(a) Defined benefit Plans - As per Actuarial valuation as on December 31, 2009 :

Gratuity(i) Expenses recognised in the statement of Profit and Loss Account for the year

1. Current service cost 181.10 4.17 190.63 4.362. Interest cost 178.36 6.86 142.81 6.013. Expected return on plan assets (204.25) — (194.58) —4. Net actuarial (gain)/loss recognised during the year (133.86) 4.54 234.40 (5.81)5. Expense/(Income) recognised in profit & loss account 21.35 15.57 373.26 4.56 [Gratuity expense/(income) have been recognised in Contribution/

Provision for provident fund, superannuation scheme, gratuity fund etc. in “Personnel Cost” under Schedule 14]

(ii) Actual return on plan assets for the year1. Expected return on plan assets 204.25 — 194.58 — 2. Actuarial gain/(loss) on plan assets (38.87) — 39.51 — 3. Actual return on plan assets 165.38 — 234.09 —

(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end1. Present value of the defined benefit obligation 2342.20 69.21 2940.12 84.422. Fair value of plan assets 2141.47 — 2553.09 — 3. Net Asset/(Liability) recognised in the balance sheet (200.73) (69.21) (387.03) (84.42)

(iv) Change in defined benefit obligation during the year1. Present value of obligation at the beginning of the year 2940.12 84.42 2551.45 80.182. Current service cost 181.10 4.17 190.63 4.363. Interest cost 178.36 6.86 142.81 6.014. Benefits paid (784.65) (30.78) (218.68) (0.32)5. Actuarial (gain)/loss on obligation (172.73) 4.54 273.91 (5.81)6. Present value of obligation as at the end of the year 2342.20 69.21 2940.12 84.42

(v) Changes in fair value of plan asset during the year1. Fair value of plan assets as at the beginning of the year 2553.09 — 2432.22 — 2. Expected return on plan assets 204.25 — 194.58 — 3. Contributions made 207.65 — 105.46 — 4. Benefits paid (784.65) — (218.68) — 5. Actuarial gain/(loss) on plan assets (38.87) — 39.51 — 6. Fair value of plan assets as at the end of the year 2141.47 — 2553.09 —

(vi) Major categories of Plan Assets as a percentage of total plan assets1. Central government securities 29.64% — 24.84% — 2. State government securities 12.32% — 10.03% — 3. Private sector bonds 20.90% — 15.21% — 4. Special deposit scheme 25.54% — 21.69% — 5. Cash at bank 1.15% — 1.10% — 6. Investment in insurance companies 22.06% — 22.67% — 7. Others (11.61%) — 4.46% —

(vii) Actuarial assumptions1. Discount rate 8.0% 8.0% 7.0% 7.0%2. Expected Rate of return on plan assets 8.0% — 8.0% — 3. Salary escalation 4.0%-6.0% 4.0%-6.0% 4.0%-6.0% 4.0%-6.0%

(viii) Experience adjustments1. Experience adjustments on plan assets (38.87) — — — 2. Experience adjustments on plan liabilities (49.77) 4.54 — —

Notes.indd 56 3/17/2010 11:53:43 AM

57Notes

24. Employee Benefits : (Contd.)

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Defined benefit Plans - As per Actuarial valuation as on December 31, 2009 : (Contd.)

Other long term benefits The defined benefit obligations which are provided for but not funded are as under : Compensated Absence/Leave Salary 365.02 491.71(b) Gratuity is administered through duly constituted and approved independent trusts and

also through Group gratuity scheme with Life Insurance Corporation of India(c) Future salary increases considered in acturial valuation take in to account inflation,

seniority, promotion and other relevant factors, such as supply and demand in the employment market

(d) Basis used to determine expected rate of return on plan assets : The expected rate of return on plan assets is based on market expectation, at the

beginning of the year, for returns over the entire life of the related obligation.(e) Accounting standard 15 (Revised 2005) "Employee Benefits" requires the disclosure of

experience adjustments for past four years, however, the information is given only for the current year.

(f) During the year the Company has recognised the following amounts in the Profit & Loss account in Schedule 14 :

Salaries, wages, bonus includes compensated absences 49.17 93.02 Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc. includes : Provident Fund & Family Pension 275.30 278.81 Superannuation Fund 239.24 370.57 Gratuity Fund 36.92 377.82 Other funds 0.49 1.00

25. Advances and loans to the subsidiary of Rs. 688.35 lakhs (Rs. 709.47 lakhs) is due from Chemtreat Composites India Private Ltd. Maximum amount due during the year Rs. 750.22 lakhs (Rs. 786.22 lakhs). This amount is interest free and repayable on demand.

26. The Company has entered into an agreement with Laxmi Organic Industries Ltd. on May 15, 2009 for the sale of its business of Diketene and downstream intermediate products together with removable plant and equipment. On receipt of full consideration, the transaction has been concluded in January 2010.


28. The figures in brackets are those in respect of the previous accounting year.


R. A. Shah ChairmanP. Palm Vice-Chairman & Managing DirectorDiwan A. Nanda DirectorB. L. Gaggar Director Finance & Company Secretary


Notes.indd 57 3/17/2010 11:53:43 AM


Statement pursuant to Part IV of Schedule VI to The Companies Act, 1956Balance Sheet Abstract and Company’s General Business ProfileI. Registration Details

Registration No. 1 1 – 1 0 8 0 6 State Code 1 1

Balance Sheet Date 3 1 – 1 2 – 2 0 0 9Date Month Year

II. Capital raised during the year (Amount in Rs. Thousands)Public Issue N I L Right Issue N I L

Bonus Issue N I L Private Placement N I LIII. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities* 5 8 1 4 0 8 0 Total Assets 5 8 1 4 0 8 0Sources of FundsPaid-up Capital 2 6 6 6 0 7 Reserves and Surplus 3 2 1 1 3 1 8

Secured Loans N I L Unsecured Loans 2 0 4 7 8Application of FundsNet Fixed Assets 1 5 2 7 3 3 6 Investments 1 2 4 4 9 9 5

Net Current Assets** 7 2 6 0 7 2 Miscellaneous Expenditure N I L

Accumulated Losses N I L*Including Shareholder’s funds ** Includes Deferred tax Assets (net) Rs. 27572

IV. Performance of Company (Amount in Rs. Thousands)Turnover (Gross Revenue) @ 9 4 7 6 4 9 5 Total Expenditure 7 8 4 5 4 2 8@ Includes Other Income Rs. 263082

+ – Profit Before Tax + – Profit After TaxP 1 6 3 1 0 6 7 P 1 0 8 1 3 5 6

Earnings Per Share in Rs.** 4 0 . 5 6 Dividend Rate % 2 5 0** Earnings per share has been computed by dividing profit after tax by the total number of issued equity shares as at the year end.

V. Generic Names of Three Principal Products of CompanyItem Code No. 3 2 0 4 1 7 . 5 1

Product Description H O S T A P E R M G R E E N G N X

Item Code No. 2 9 2 4 1 0 . 1 9

Product Description A C E T O A C E T M O N O M E T H Y L A M I D E 7 0 %

Item Code No. 2 9 1 5 9 0 . 0 0

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




Name of the Subsidiary Company Chemtreat Composites India Private Limited1. Financial year of the Subsidiary Company January 2009 – December 20092. Total issued and paid-up Share Capital of the Subsidiary Company

(a) Issued 500,000 equity shares of Rs. 10/- each(b) Subscribed and Paid-up 500,000 equity shares of Rs. 10/- each

3. Extent of Interest of Clariant Chemicals (India) Limited at the end of the financial year 100%4. Net aggregate amount of profits (Loss) of the Subsidiary Company not dealt with in the

accounts of the Clariant Chemical (India) Limited(a) for the current financial year Rs. (52.39) Lakhs(b) for the previous financial years Rs. 10.92 Lakhs

Statement Pursuant to Section 212 of the Companies Act, 1956




Notes.indd 58 3/17/2010 11:53:44 AM

59

Directors‘ Report

Your directors are pleased to present the 23rd annual report and audited statement of accodunts for the year ended December 31, 2009.

Financial ResultsThe financial performance of the Company for the year ended December 31, 2009 is summarized below:

Rs. ‘000

2009 2008

Revenue 33,086 40,707

Expenditure (38,325) (50,859)

Loss before taxation (5,239) (10,152)

Less: Provision for taxation (incl. deferred tax) – (6,345)

Loss after tax (5,239) (3,807)

Add: Balance brought forward from previous year 1,092 4,899

Balance carried forward to balance sheet (4,147) 1,092

Review of OperationsThe Company is a 100% Export Oriented Unit. The global economic & financial crisis affected the Company’s performance. Sales were down at Rs. 298.5 Lakhs as against Rs. 384.9 Lakhs in the previous year.

However, the Company continued its efforts of exploring new markets and succeeded in establishing new market segments in India and Australia.

DividendThe Board has not recommended any dividend for the year.

Particulars of EmployeesThere are no employees in respect of whom information pursuant to section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended.

DirectorsMr. Dominik Strebel resigned with effect from February 20, 2009 and Mr. Walter Kindler was appointed in his place. Mr. Heiner Meier , Mr. Walter Kindler and Mr. B L Gaggar were the Directors of the Company as on December 31, 2009.

Mr. Heiner Meier resigned with effect from January 1, 2010 and Mr. Peter Palm was appointed in his place. Mr. Walter Kindler resigned with effect from January 1, 2010 and Dr. H. Schloemer was appointed in his place.

Directors’ Responsibility StatementIn terms of section 217 (2AA) of the Companies Act, 1956 your directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at December 31, 2009 and of the loss of the Company for that year;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earnings and OutgoInformation required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto and forms part of the report.

AuditorsM/s. Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and being eligible offers themselves for re-appointment.

For and on behalf of the Board of Directors P. Palm B. L. Gaggar

Mumbai, February 19, 2010 Director Director

Information as per section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' report for the year ended December 31, 2009.

FORM-AParticulars with respect to conservation of energyA. Power and fuel consumption:

2009 2008

1. Electricity:(a) Purchased: Units (in ‘000 KwH) 327 278

Total amount (Rs. Lakhs) 17.66 14.87

Rate per Unit (Rs.) 5.39 5.35

(b) Own Generation: (i) Through diesel generator

Units (in ‘000 KwH) 6.99 20.89

Units per Litre of diesel oil 1.49 1.67

Cost per Unit (Rs.) 23.75 22.57

(ii) Through Steam turbine/generator Nil Nil

2. Furnace Oil (including L.S.H.S.)Quantity (MT) 9.05 14.02

Total Cost (Rs. Lakhs) 3.21 5.32


3. Other internal generation Nil Nil

B. Consumption per unit of production:

The Company manufactures a wide variety of products. The products before reaching the finished final stage pass through various operations in the different plants. It is, therefore, not feasible to furnish the information in respect of consumption per unit of production.

FORM-BForm of disclosure of particulars with respect to Technology Absorption, Research & Development (R&D)

Research & Development

1. Specific Areas in which R&D carried out by the Company

: Development of the pigmented polysilazane and chrome replacement coatings.

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

: Introduction of new products for Indian Railways & automotive industry.

3. Future plan of action : Development of various coatings colours for Indian Railways and chrome replacement coatings for automotive parts.

Technology absorption, adaptation and innovation:1. Efforts, in brief, made towards technology

absorption, adaptation and innovation: New synthesis are successfully adopted &

scaled up with Group Support. 2. Benefits derived as a result of the above

efforts, e.g. product improvement, cost reduction, product development, import substitution etc.

: The new products can be used as high quality chemicals in pharma applications.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished

:

(a) Technology imported : Polysilazanes manufacture and formulations(b) Year of import : 2006(c) Has technology been fully

absorbed?: Formulations technology transfer was

successfully adopted and standardized in 2007.

Foreign Exchange Earnings and Outgo

: Refer Schedule 14: of Notes to Accounts Item Nos. 14 to 16


P. Palm B. L. GaggarMumbai, February 19, 2010 Director Director

Annexure to Directors‘ Report

Chemtreat Composites India Private LimitedAnnual Report 2009

Chemtreat Balance New.indd 59 3/17/2010 11:17:34 AM

60 Chemtreat Composites India Private Limited Annual Report 2009

1. We have audited the attached Balance Sheet of Chemtreat Composites India Private Limited as at December 31, 2009, and also the Profit and Loss Account and the 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.

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

3. 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, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (a) we have obtained all the information and explanation, which to the best of our 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 the books; (c) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by

this report are in agreement with the books of accounts; (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 Companies Act, 1956;

(e) on the basis of the written representations received from the directors, as on December 31, 2009, and taken on record by Board of Directors, we report that none of the directors of the Company are disqualified as on December 31, 2009 from being appointed as director, in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

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

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

(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 for the year ended on that date.



A. C. KhannaPlace : Mumbai PartnerDate : 19th February, 2010 Membership No.: 17814

Auditors‘ ReportTo the Members of Chemtreat Composites India Private Limited

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS’ REPORT TO THE MEMBERS OF CHEMTREAT COMPOSITES INDIA PRIVATE LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009(i) (a) The Company has maintained proper records showing full particulars including

quantitative details and situation of fixed assets. (b) The Company has a programme of physical verification of Fixed assets. As per the said

programme, certain assets were physically verified during the last year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) As per information and explanations given to us, there are no fixed assets disposed off during the year. Therefore, the provisions of clause 4 (i)(c) of the Order are not applicable to the Company.

(ii) (a) The Inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub-clauses (b), (c) and (d) are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub-clauses (f) and (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that certain items purchased / sold are of special nature for which suitable alternative sources do not exist for obtaining comparative quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) In our opinion and 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 Section 301 of the Companies Act, 1956.

(b) Sub-clause (b) is not applicable.(vi) In our opinion and according to the information and explanations given to us, the Company

has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. Therefore, the provisions of clause 4 (vi) of the Order are not applicable to the Company.

(vii) The Company does not have an internal audit system; however the internal control systems are comensurate with the size and the nature of its business.

(viii) We are informed that the Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of the Company's business. Therefore, the provisions of clause 4 (viii) of the Order are not applicable to the Company

(ix) (a) According to the records of the Company, Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, cess and other material statutory dues applicable to it have been generally regularly deposited during the reporting period with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears, as at December 31, 2009 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess that have not been deposited on account of any dispute.

(x) In our opinion, the accumulated losses of the company are less than fifty percent of its networth and it has incurred cash losses during the year covered by our audit and also in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, there were no borrowings or dues payable to any financial institution or bank or debenture holders during the reporting year.

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

(xiii) In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/ society. Therefore the provisions of clause 4 (xiii) of the Order are not applicable to the Company.

(xiv) In our opinion the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv) In our opinion and 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. Accordingly, the provisions of clause 4 (xv) of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, there are no term loans raised during the year under audit and hence, the provisions of clause 4 (xvi) of the Order are not applicable to the Company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term of Rs. 52,692 (‘000) have been used for long-term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any secured debentures. Therefore, the provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) The Company has not raised any money by public issue during the year. Therefore, the provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) According to the information and explanations furnished by the management, which have been relied upon by us, no fraud on or by the Company has been noticed or reported to/by management during course of our audit.



A. C. KhannaPlace : Mumbai PartnerDate : 19th February, 2010 Membership No.: 17814


61

Balance Sheetas at 31st December, 2009

Per our report attached For and on behalf of the Board

For Deloitte Haskins & Sells P. Palm Director

Chartered Accountants

B. L. Gaggar Director

A. C. KhannaPartner

Mumbai, 19th February, 2010 Mumbai, 19th February, 2010

Schedule31-12-09Rs. '000

31-12-08Rs. '000

SOURCES OF FUNDS

Shareholders' funds

Share capital 1 5,000 5,000

Reserves and surplus 2 4,956 6,048

9,956 11,048

Loan funds

Unsecured loans 3 66,000 63,000

75,956 74,048

APPLICATION OF FUNDS

Fixed assets 4

Gross block 82,039 79,811

Less : Accumulated depreciation 21,686 14,774

Net block 60,353 65,037

Capital work-in-progress and advances, etc. 2,295 2,561

62,648 67,598

Current assets, loans and advances

Inventories 5 9,921 8,757

Sundry debtors 6 2,952 953

Cash and bank balances 7 1,639 7,964

Loans and advances 8 1,656 726

16,168 18,400

Less : Current liabilities

Liabilities 9 7,007 11,950

7,007 11,950

Net current assets 9,161 6,450

Profit and loss account 4,147 –

75,956 74,048

Notes on Balance Sheet and Profit and Loss Account 14

Profit and Loss Accountfor the year ended 31st December, 2009

Schedule2009

Rs. '0002008

Rs. '000

INCOME

Sales – Gross 30,213 38,487

Less : Excise duty 362 –

Sales – Net 29,851 38,487

Other income 10 3,235 2,220

33,086 40,707

EXPENDITURE

Cost of materials 11 3,540 11,619

Interest Paid 12 45 –

Depreciation 4 6,912 6,816

Other expenditure 13 27,828 32,424

38,325 50,859

LOSS BEFORE TAXATION (5,239) (10,152)

Provision for taxation

Deferred tax – (6,345)

LOSS AFTER TAXATION (5,239) (3,807)

Balance brought forward from previous year 1,092 4,899

Balance carried to the balance sheet (4,147) 1,092

Notes on Balance Sheet and Profit and Loss Account 14

Basic and Diluted earnings per share (Rupees)

(10.48) (7.61)

Face value per share (Rupees)

10.00 10.00



2009 Rs. '000

2008 Rs. '000

A. CASH FLOW FROM OPERATING ACTIVITIES :Net Loss before taxation (5,239) (10,152)

Adjustments for :Depreciation 6,912 6,816 Unrealised foreign exchange (gain)/ loss (Net) 35 25 VAT setoff admissible written-off – 2,822 Service tax recoverable written off – 1,228 Interest expenses 45 – Assets written-off – 235

Operating profit before working capital changes 1,753 974 Adjustments for :Trade and other receivables (2,964) 699 Inventories (1,164) 9,802 Trade, other payables and provisions (4,943) (5,849)

Cash used in operations (7,318) 5,626 Direct taxes paid- (Net of refunds) – (13)

Net cash used in operating activities (7,318) 5,613 B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets (1,962) (6,156)Net Cash used in investing activities (1,962) (6,156)

C. CASH FLOW FROM FINANCING ACTIVITIES :Loan received from Holding Company 3,100 7,500 Loans repaid to Holding Company (100) – Interest paid (45) –

Net Cash from financing activities 2,955 7,500 Net increase in cash and cash equivalents (A+B+C) (6,325) 6,957 Cash and cash equivalents as at beginning of the year 7,964 1,007 Cash and cash equivalents as at the end of the year (Refer Schedule 7) 1,639 7,964

Notes :1. The Cash flow has been prepared under the "Indirect Method" as set out in Accounting

Standard-3 on Cash flow statement notified by the Companies (Accounting Standards) Rules, 2006.


3. Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification.

Cash Flow Statementfor the year ended 31st December, 2009

Per our report attached to the Balance Sheet For and on behalf of the BoardFor Deloitte Haskins & Sells P. Palm DirectorChartered AccountantsA. C. Khanna B. L. Gaggar DirectorPartnerMumbai, 19th February, 2010 Mumbai, 19th February, 2010


SCHEDULE 1 : SHARE CAPITAL 31-12-09 Rs. '000

31-12-08 Rs. '000

Authorised

5,00,000 Equity shares of Rs. 10/- each 5,000 5,000

Issued and subscribed

5,00,000 Equity shares of Rs. 10/- each fully paid up 5,000 5,000

Notes :

Of the above :

(a) The entire issued equity share capital is held by Clariant Chemicals (India) Limited, the holding company, ultimate holding company being Clariant AG, Switzerland.

(b) 296,400 equity shares of Rs. 10/- each, were allotted as fully paid up bonus shares by capitalisation of Rs. 2,964,000 from Securities premium account.

SCHEDULE 2 : RESERVES AND SURPLUS 31-12-09 Rs. '000

31-12-08 Rs. '000

Securities premium account

As per last Balance sheet 4,956 4,956

Profit and loss account – 1,092

4,956 6,048

SCHEDULE 3 : UNSECURED LOANS 31-12-09 Rs. '000

31-12-08 Rs. '000

Demand loan (Interest free)

From the holding company 66,000 63,000

66,000 63,000

SCHEDULE 4 : FIXED ASSETS Rs. '000GROSS BLOCK DEPRECIATION NET BLOCK

As at 31-12-2008

Additions Deductions As at 31-12-2009

As at 31-12-2008

Deductions For the year

As at 31-12-2009

As at 31-12-2009

As at 31-12-2008

Tangible AssetsLand freehold 884 – – 884 – – – – 884 884 Buildings 12,161 – – 12,161 410 – 198 608 11,553 11,751 Plant, machinery, equipment etc. 64,949 2,219 – 67,168 14,176 – 6,617 20,793 46,375 50,773 Furniture, fixtures and office appliances 1,817 9 – 1,826 188 – 97 285 1,541 1,629 Total 79,811 2,228 – 82,039 14,774 – 6,912 21,686 60,353 Previous year 76,447 3,663 299 79,811 8,022 64 6,816 14,774 65,037 Capital work-in-progress 785 1,885 Advances against capital orders 1,510 676

2,295 2,56162,648 67,598


63

SCHEDULE 5 : INVENTORIES 31-12-09 Rs. '000

31-12-08 Rs. '000


Stores and spare parts 616 715

Raw materials 4,611 5,863

Packing materials 52 40

Finished goods 4,364 2,139

Work-in-progress 278 –

9,921 8,757

SCHEDULE 6 : SUNDRY DEBTORS 31-12-09 Rs. '000

31-12-08 Rs. '000

Unsecured – Considered good

Over six months 222 –

Other debts 2,730 953

[includes Rs. Nil; Previous Year Rs. 26 ('000) due from holding Company]

2,952 953

SCHEDULE 7 : CASH AND BANK BALANCES 31-12-09 Rs. '000

31-12-08 Rs. '000

Cash on hand 1 3

With Scheduled Banks :

On current accounts 1,638 7,961

1,639 7,964

SCHEDULE 8 : LOANS AND ADVANCES 31-12-09 Rs. '000

31-12-08 Rs. '000

(Unsecured – considered good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received 820 463

VAT set off admissible 522 –

Advance payment of Income tax (Net of provision for taxation) 44 44

Balances with customs and excise on current account 270 219

1,656 726

SCHEDULE 9 : CURRENT LIABILITIES 31-12-09 Rs. '000

31-12-08 Rs. '000

Sundry creditors

Due to micro enterprises and small enterprises – –

(See Note 6, Schedule 14)

Due to holding company 2,835 7,973

Due to others 4,172 3,977

7,007 11,950


Schedulesforming part of the Profit and Loss Account

SCHEDULE 10 : OTHER INCOME 2009 Rs. '000

2008 Rs. '000

Exchange Gain (Net) – 1,434 Income from Services rendered 980 – Sale of By-Product 114 183 [excluding Excise Duty Rs. 18 ('000); Previous Year Rs. 29 ('000)]Sale of Packing Materials to Holding Company – 20 Sale of Waste/Scrap Materials – 204 Sundry Credit Balances Written back – 242 Insurance Claim 2,001 – Miscellaneous income 140 137

3,235 2,220

SCHEDULE 11 : COST OF MATERIALS 2009 Rs. '000

2008 Rs. '000

Raw materials Opening Stock 5,863 8,525 Purchases 4,444 1,645 Less : Closing stock (4,611) (5,863)Raw material Consumption 5,696 4,307 Packing materials Opening Stock 40 48 Purchases 359 257 Less : Closing stock (52) (40)Packing material Consumption 347 265

Finished goodsOpening Stock 2,139 8,975 Less : Closing stock (4,364) (2,139)

(2,225) 6,836 Work-in-progressOpening Stock – 211 Less : Closing stock (278) –

(278) 211 3,540 11,619

SCHEDULE 12 : INTEREST PAID 2009 Rs. '000

2008 Rs. '000

Interest Paid Others 45 –

45 –

SCHEDULE 13 : OTHER EXPENDITURE 2009 Rs. '000

2008 Rs. '000

Stores and Spare parts etc. consumed 642 871 Repairs and maintenance : Plant and machinery 489 987 Others * 1,188 1,147 Power and fuel 2,140 2,043 Rates and taxes (including water charges) 387 106 Insurance * 13 82 Clearing, forwarding and transport * 2,828 4,316 Personnel Cost * 8,394 9,441 Travelling and conveyance * 2,567 2,802 Commission 401 – Legal, professional & consultancy (See Note 8, Schedule 14) 2,551 3,237 Assets written-off – 235 Excise duty 201 161 Exchange loss (Net) 629 – Personnel protection and safety expense 1,185 1,039 Labour charges * 2,000 1,152 IT related cost * 1,474 162 VAT Set off Admissible Written off – 2,822 Service Tax Recoverable written off – 1,228 Miscellaneous * 739 593

27,828 32,424 * See Note 17, Schedule 14



NotesSCheDuLe 14 : Notes on the Balance Sheet and Profit and Loss Account for the year ended 31st December, 2009







II. Excise Duty

Excise duty payable on products is accounted for at the time of dispatch of goods from the factories but is accrued for stocks held at the year end.

Excise Duty related to the difference between the closing stock and opening stock of finished goods has been recognized separately in the profit and loss account under schedule of ‘Other Expenditure’.

III. Employee Benefits/Leave Encashment

As there are no permanent employees of the Company, no provision for employee benefits/leave encashment is required to be made.

IV. Fixed Assets and Depreciation

(A) All fixed assets are stated at cost less accumulated depreciation.

(B) The cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use.

(C) Depreciation on the fixed asset is provided on the straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956, except for:

(a) Plant, machinery and equipment (except Laboratory equipment, Fire Fighting and Weighing Machine) over their useful life of 10 Years as determined by the Company on a Straight Line Basis.

(c) Computers and Printers on which 25% straight line method is applied.

V. Inventories

Inventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventories is generally arrived at on the following bases :

Raw materials, packing materials, trading items and store and spares : Weighted average costFinished goods and work-in-progress : Absorption costing at works cost

VI. Sundry Debtors/Loans and Advances

Sundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances, if any.

VII. Foreign Currency Translations

(A) Foreign currency transactions are accounted at the rate prevailing on the date of transaction.

(B) Monetary items denominated in foreign currency, are translated at the exchange rate prevailing on the last day of the reporting period.

(C) Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction.

(D) Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account.

VIII. Income Tax (A) Income-tax expense comprises current tax and deferred tax charge or

credit.

(B) The current tax, if any, is determined as the amount of tax payable in respect of the estimated taxable income for the period.

(C) The deferred tax charge or credit is recognised, using prevailing enacted or substantively enacted tax rates. Where there are unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based on developments during the reporting period and available case laws, to reassess realization/liabilities.

IX. Provisions/Contingencies

Provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

2. Segment Information for the year ended 31st December, 2009 (As required by Accounting Standard (AS) - 17 Segment Reporting)

(a) The Company operates in only one primary business segment of Speciality Chemicals i.e. manufacturing synthetic resins Consequently, disclosure for primary segment under AS 17 – Segment Reporting is not applicable to the Company.


(i) India

(ii) Outside India


2009 Rs’000

2008 Rs’000

India Outside India

Total India Outside India

Total

External sales 4,335 25,516 29,851 – 38,487 38,487

Segment assets 76,309 2,463 78,772 85,027 927 85,954

Additions to fixed assets 1,962 – 1,962 6,156 – 6,156 Note : Total assets exclude the Advance payment of Income Tax Rs. 44 (‘000)

[Previous year Rs. 44 (‘000)].


A. Relationship :

(a) Holding Company :

Clariant Chemicals (India) Limited, holds 100% equity shares in the Company.

EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG together hold 63.40% equity shares in the Clariant Chemicals (India) Limited, The ultimate holding company is Clariant AG, Switzerland.

(b) Other related parties in the Clariant group where common control exists and with whom the company has transactions :

Clariant Advanced Materials GmbH Clariant Life Science Molecules (Florida) Inc.

Clariant Corporation Kion Specialty PolymersClariant (Japan) KK

(c) Key Management Personnel :

H. J. Meier – Director (upto December 31, 2009).


65

B. During the year following transactions were entered into with related parties :

Rs. '000Name of party Year Sale of

GoodsPurchase of goods

Services received

Purchase of Fixed Assets

Loans taken

Loans Repaid

Amount Payable at the

year end #

Amount receivable at the

year end Clariant Chemicals (India) Ltd. 2009 – – 11,594 – 3,100 100 68,835 –

2008 * 20 48 11,500 2,176 7,500 – 70,973 26Clariant Advanced Material GmbH 2009 7,364 – – – – – – 2302

2008 17,243 – – – – – – 910Clariant (Japan) KK 2009 3221 – – – – – – 68

2008 256 – – – – – – 17Kion Specialty Polymers 2009 – – – – – – – –

2008 7,242 – – – – – – – Clariant Corporation 2009 8188 – – – – – – –

2008 9,021 – – – – – – – Clariant Life Science Molecules (Florida) Inc. 2009 – 1200 – – – – – –

2008 – – – – – – – – # Included in Unsecured Loan Rs. 66,000 ('000); [Previous Year Rs. 63,000 ('000)], Sundry Creditors Rs. 2,835 ('000); [Previous Year Rs.7,973 ('000)] .

* Sale of packing material.

31-12-2009 Rs. '000

31-12-2008 Rs. '000

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) 4,490 5,325

5. Deferred taxes :During the year ended 31st December 2009, the Company has incurred losses resulting in unabsorb carry forward tax losses. The Company is eligible for a tax holiday under section 10B of the Indian Income-tax Act, 1961. Though the management is confident of generating profits in the future, there is currently no convincing evidence of virtual certainty that the Company would reverse the tax loss carry forward beyond the tax holiday period. Accordingly the Company has not recognised any deferred tax assets resulting from the carry forward tax losses. Further, deffered tax liability on account of timing differences in case of depreciation does not arise by virtue of explanation 6 to Sec. 43 (6) of the Indian Income-tax Act, 1961 where the book depreciation shall be deemed to be the depreciation actually allowed under the Income-tax Act.

6. Disclosure required under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) are given as follows :(a) Principal amount due — — Interest due on the above — — (b) Interest paid during the year beyond the appointed

day — — (c) Amount of interest due and payable for the period

of delay in making payment without adding the interest specified under the Act — —

(d) Amount of interest accrued and remaining unpaid at the end of the year — —

(e) Amount of further interest remaining due and payable even in the succeeding years, untill such date when the interest dues as above are actually paid to the small enterprise for the purpose of disallowance as a deductible expenditure under section 23 of the Act — —

The above information and that given in Schedule- 9 'Liabilities' regarding micro enterprise and small enterprises has been determined on the basis of information available with the Company. This has been relied upon by the auditors.

7. Earnings per share :(a) Net loss after taxation (Rupees '000) (5,239) (3,807)(b) Number of equity shares outstanding 500,000 500,000 (c) Basic and Diluted loss per share (In Rupees) (10.48) (7.61)(d) Face value per share (In Rupees) 10 10

31-12-2009 Rs. '000

31-12-2008 Rs. '000

8. Legal, professional & consultancy in Schedule 13 : Other expenditure include :

Audit fees and fees for other services : (Excluding service tax)

(a) Audit fees 300 300

(b) Other services 300 525

600 825 9. Capacity and production :

2009 2008

Class of goods Annual Installed Capacity

M. Tonnes

Production* M. Tonnes

Annual Installed Capacity

M. Tonnes

Production* M. Tonnes

Synthetic Resins 750.000 16.253 750.000 10.675

* Excluding captive consumption and recovered solvents 5.44 M.Tonnes. Notes : 1. The classification between the class of goods and the installed capacity have been

certified by the Director on which the auditors have placed reliance, this being a technical matter.

2. Licensed capacity per annum not indicated due to the abolition of Industrial Licenses as per Notification No. 477(E) dated 25th July, 1991 issued under The Industries (Development and Regulations) Act 1951.

10. Sales , Opening and Closing Stock :

Class of goods Opening Stock Closing Stock Sales (Inclusive of excise

duty)Quantity

M. TonnesValue

Rs. ‘000Quantity*

M. TonnesValue

Rs. ‘000Quantity** M. Tonnes

Value Rs. ‘000

Synthetic Resins 2.617 2,139 9.298 4,364 9.034 30,213 (8.054) (8,975) (2.617) (2,139) (16.069) (38,487)

** Excludes free samples 0.091 M. Tonnes (Previous Year 0.037 M. Tonnes) and material lost in transit 0.369 M. Tonnes (Previous Year Nil).

* Excludes write-off 0.078 M.Tonnes (Previous Year 0.006 M. Tonnes).11. Raw Materials consumed :

2009 2008Quantity

M.TonnesValue

Rs. ‘000Quantity

M.TonnesValue

Rs. ‘000(a) Silanes 25.137 4,696 4.811 2,855 (b) Others * 1,000 1,452

5,696 4,307 * None of the items individually exceed 10% of the total value of raw materials

consumed

Notes



12. Consumption of raw materials :

2009 2008% of total

ConsumptionValue

Rs. ‘000 % of total

ConsumptionValue

Rs. ‘000(a) Raw materials :

Imported 47.15 2,686 46.46 2,001 Indigenous 52.85 3,010 53.54 2,306

100.00 5,696 100.00 4,307 (b) Components and spare parts referred to in Paragraph 4D (c ) of Schedule VI of the

Companies Act, 1956 are assumed to be incorporated in the goods produced and not those used for maintenance of plant and machinery.

13. Disclosure in respect of Derivative Instruments : (a) During the year, the Company has not used any derivative Instruments to hedge its

exposure in foreign currency. (b) Foreign currency exposures not covered by a derivative instrument. Amount receivable on account of export of goods and services.

31-12-2009 31-12-2008Currency Amount in

foreign currencyRs. ‘000 Amount in

foreign currencyRs. ‘000

USD 3,450 161 – – EUR 34,248 2,302 13,549 927

2,463 927

31-12-2009 Rs. '000

31-12-2008 Rs. '000

14. Value of imports (C.I.F.) :Raw materials 1,458 –

15. Earnings in foreign exchange :(a) Exports (F.O.B.) 23,903 35,604 (b) Insurance and freight 1,613 2,883 (c) Exchange gain (net) – 1,434

31-12-2009 Rs. '000

31-12-2008 Rs. '000

16. Expenditure in foreign currency : (a) Exchange Loss (net) 629 – (b) Product registration fee 169 –

17. The Company has entered in to a cost sharing agreement dated 30th May, 2006 with the holding company for reimbursement of costs and accordingly expenses of Rs. 11,594 (‘000) [Previous Year : Rs. 11,500 (‘000)] have been reimbursed by the Company and included in Schedule 13 : Other Expenditure under the respective expense head as follows :Expense head

Personnel cost 8,080 9,143 Travelling and conveyance 1,725 1,962 IT related cost 1,475 162 Repairs and maintenance – Others 45 32 Labour charges 93 62 Clearing, forwarding & transport 6 – Miscellaneous expenses 170 139 Total 11,594 11,500


For and on behalf of the BoardP. Palm Director

B. L. Gaggar Director


I. Registration DetailsRegistration No. 1 1 – 4 3 2 3 5 State Code 1 1

Balance Sheet Date 3 1 – 1 2 – 2 0 0 9Date Month Year

II. Capital raised during the year (Amount in Rs. Thousands)Public Issue N I L Right Issue N I L

Bonus Issue N I L Private Placement N I LIII. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities* 8 2 9 6 3 Total Assets 8 2 9 6 3Sources of FundsPaid-up Capital 5 0 0 0 Reserves and Surplus 4 9 5 6

Secured Loans N I L Unsecured Loans 6 6 0 0 0Application of FundsNet Fixed Assets 6 2 6 4 8 Investments N I L

Net Current Assets 9 1 6 1 Miscellaneous Expenditure N I L

Accumulated Losses 4 1 4 7*Including Shareholders’ funds

IV. Performance of Company (Amount in Rs. Thousands)Turnover (Gross Revenue) @ 3 3 0 8 6 Total Expenditure 3 8 3 2 5@ Includes Other Income Rs. 3235

+ – Profit Before Tax + – Profit After TaxP 5 2 3 9 P 5 2 3 9

Earnings Per Share in Rs.** ( 1 0 . 4 8 ) Dividend Rate % N I L

** Earnings per share has been computed by dividing profit after tax by the total number of issued equity shares as at the year end.

V. Generic Names of Three Principal Products of Company

Item Code No. Product Description 3 9 1 0 0 0 1 0 – C L A R I A N T K I O N M L 3 3 / C 12

Item Code No. Product Description 3 9 1 0 0 0 1 0 – C L A R I A N T K I O N H T T 1 8 0 0

Item Code No. Product Description 3 9 1 0 0 0 9 0 – T U T O P R O M M A T T H D


P. Palm Director

Mumbai, 19th February, 2010 B. L. Gaggar Director

Statement pursuant to Part IV of Schedule VI to The Companies Act, 1956Balance Sheet Abstract and Company’s General Business Profile

Chemtreat Balance New.indd 66 3/18/2010 2:51:37 PM

67

1. We have audited the attached Consolidated Balance Sheet of Clariant Chemicals (India) Limited and its subsidiary (the Clariant Chemicals (India) Limited Group), as at 31st December, 2009 and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of Clariant Chemicals (India) Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. We report that the consolidated financial statements have been prepared by the Clariant Chemicals (India) Limited’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, notified by the Companies (Accounting Standards) Rules, 2006.

4. In our opinion and to the best of our information and according to the explanations given to us, the attached Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Consolidated Balance Sheet, of the state of affairs of the Clariant Chemicals (India) Limited Group as at 31st December, 2009;

(ii) in the case of the Consolidated Profit and Loss Account, of the profit of the Clariant Chemicals (India) Limited Group for the year ended on that date; and

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



A. C. KhannaPartner

Membership No.: 17814Mumbai: 19th February, 2010

Auditors‘ Report to the MembersAuditors’ Report to the Board of Directors of Clariant Chemicals (India) Limited on the Consolidated Financial Statements of Clariant Chemicals (India) Limited

Clariant Chemicals (India) Limited — Consolidated

Balance Consoli-Clariant -New.indd 67 3/17/2010 12:08:17 PM

68 Clariant Chemicals (India) Limited — Consolidated Annual Report 2009

Consolidated Balance Sheetas at 31st December, 2009

Schedule31-12-09

Rs. Lakhs31-12-08

Rs. LakhsSOURCES OF FUNDSShareholders' funds Share capital 1 2666.07 2666.07 Reserves and surplus 2 32061.13 29097.60

34727.20 31763.67Loan funds Unsecured loans 3 204.78 309.07

204.78 309.07Deferred tax liability – Net (See note 6, Schedule 17) — 254.94

34931.98 32327.68APPLICATION OF FUNDSFixed assets 4 Gross block 36017.85 39816.46 Less : Accumulated depreciation and impairment 21301.71 23538.07 Net block 14716.14 16278.39 Capital work-in-progress and advances, etc. 606.22 1072.54

15322.36 17350.93Fixed assets held for disposal (See note 14, Schedule 17) 792.34 — Investments 5 12124.95 5459.47Deferred tax asset – Net (See note 6, Schedule 17) 275.72 — Current assets, loans and advances Inventories 6 7764.24 10631.55 Sundry debtors 7 14489.15 13219.68 Cash and bank balances 8 1713.01 921.95 Loans and advances 9 5648.70 5695.75

29615.10 30468.93Less : Current liabilities and provisions Liabilities 10 16614.62 12884.63 Provisions 11 6583.87 8067.02

23198.49 20951.65Net current assets 6416.61 9517.28

34931.98 32327.68Notes on balance sheet and profit and loss account 17


R. A. Shah Chairman





Per our report attached


A. C. KhannaPartner



69

Consolidated Profit and Loss Accountfor the year ended 31st December, 2009

Schedule2009

Rs. Lakhs2008

Rs. LakhsINCOME Sales – Gross 97624.37 100529.74 Less : Excise duty 5191.73 8505.81 Sales – Net 92432.64 92023.93 Other income 12 2663.17 2530.26

95095.81 94554.19EXPENDITURE Cost of materials 13 54558.89 58265.63 Personnel cost 14 6158.71 7229.91 Interest (Net) 15 17.12 (18.29) Depreciation/Amortisation 4 1965.18 2319.55 Impairment of fixed assets 4 136.98 728.62 Other expenditure 16 14340.70 16037.79

77177.58 84563.21Less : Service charges recovered 790.80 673.23

76386.78 83889.98PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 18709.03 10664.21Exceptional items (See note 12, Schedule 17) 2450.46 48.00PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 16258.57 10616.21Provision for taxation Current tax 5958.00 3792.00 Deferred tax (530.66) (241.74) Fringe benefit tax 39.00 118.50 (Excess)/Short provision for taxation in respect of earlier years 30.77 248.09PROFIT AFTER TAXATION 10761.46 6699.36Balance brought forward from previous year 1097.45 999.35AvAILABLE FOR APPROPRIATION 11858.91 7698.71APPROPRIATED AS FOLLOWS General reserve 1081.36 674.83 Interim dividend 2666.07 — Proposed dividend (Final) 3999.11 5065.54 Corporate tax on dividend (Interim & Final) 1132.75 860.89 Balance carried to the balance sheet 2979.62 1097.45

11858.91 7698.71Notes on balance sheet and profit and loss account 17Basic and Diluted earnings per share (Rupees) (See note 8, Schedule 17) 40.36 25.13Face value per share (Rupees) 10.00 10.00


R. A. Shah Chairman







A. C. KhannaPartner




Consolidated Cash Flow Statementfor the year ended 31st December, 2009

2009 Rs. Lakhs

2008 Rs. Lakhs

A. CASH FLOW FROM OPERATING ACTIvITIES :

Net Profit after exceptional items and before taxation 16258.57 10616.21

Adjustments for :

Depreciation/Amortisation 1965.18 2319.55

Impairment of fixed assets 136.98 728.62

Unrealised foreign exchange (gain)/loss (Net) (32.54) 60.21

Interest income (83.20) (171.67)

Dividend income (407.90) (171.56)

Loss/(profit) on sale of assets (Net) (80.31) (9.58)

Loss/(profit) on sale of investments (Net) (0.21) (0.29)


Provision for leave encashment (126.69) 4.52

Provision for ex-gratia gratuity (15.21) 4.24

Provision for gratuity (186.30) 267.80

Interest expenses 100.32 153.38


Operating profit before working capital changes 17658.77 14394.52

Adjustments for :

Trade and other receivables (1131.92) 647.54

Inventories 2867.31 825.08

Trade, other payables and provisions 3695.79 (4453.14)

Cash generated from operations 23089.95 11414.00

Direct taxes paid – (Net of refunds) (6055.45) (3288.65)

Net cash from operating activities 17034.50 8125.35

B. CASH FLOW FROM INvESTING ACTIvITIES :

Purchase of fixed assets (1024.62) (2719.66)

Sale of fixed assets 138.31 38.63

Purchase of investments (95164.44) (42571.83)

Sale of investments 88499.17 39730.92

Interest received 83.20 171.67

Dividend received 407.90 171.56

Net Cash used in investing activities (7060.48) (5178.71)


71Consolidated Cash Flow Statement

2009 Rs. Lakhs

2008 Rs. Lakhs

C. CASH FLOW FROM FINANCING ACTIvITIES :

Repayment of borrowings (104.29) (98.09)

Interest paid (93.78) (147.17)

Dividend/dividend tax paid (8984.89) (3109.75)

Net Cash used in financing activities (9182.96) (3355.01)

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 791.06 (408.37)

CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 921.95 1330.32

CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (See note 3) (Refer Schedule 8) 1713.01 921.95

Notes :

1. The Cash flow has been prepared under the "Indirect Method" as set out in Accounting Standard-3 on Cash flow statement notified by the Companies (Accounting Standards) Rules, 2006.


3. Cash and cash equivalents at the end of the year include current account balances with banks of Rs. 221.71 lakhs (Previous Year : Rs. 161.63 lakhs) which are restricted in use on account of unclaimed dividend/fixed deposit/interest on fixed deposit.

4. Figures for the previous year have been regrouped wherever necessary to conform to the current year's classification.


R. A. Shah Chairman







A. C. KhannaPartner




Schedulesforming part of the Consolidated Balance Sheet

SCHEDULE 1 : SHARE CAPITAL 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Authorised30000000 equity shares of Rs. 10/- each 3000.00 3000.00Issued and subscribed26660745 equity shares of Rs. 10/- each fully paid 2666.07 2666.07

Notes :

Of the above :

(a) 15010745 equity shares issued as fully paid up pursuant to a contract for a consideration other than cash.

(b) 8167080 equity shares are held by EBITO Chemiebeteiligungen AG. 6075000 equity shares are held by Clariant International AG. 2660000 equity shares are held by Clariant Participations AG. The ultimate holding company being Clariant AG, Switzerland.

(c) 6690610 equity shares were allotted as fully paid up bonus shares by capitalisation of Rs. 669.06 lakhs from general reserve.

SCHEDULE 2 : RESERvES AND SURPLUS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Capital reserveAs per last Balance sheet 730.11 730.11Capital redemption reserveAs per last Balance sheet 137.50 137.50Securities premium accountAs per last Balance sheet 3545.65 3545.65Investment allowance reserveAs per last Balance sheet 20.00 20.00Less : Transfer to General Reserve 20.00 —

— 20.00General reserveAs per last Balance sheet 23566.89 22892.06Add : Transfer from Investment allowance reserve 20.00 — Transfer from Profit and loss account 1081.36 674.83

24668.25 23566.89Profit and loss account 2979.62 1097.45

32061.13 29097.60

SCHEDULE 3 : UNSECURED LOANS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

From others :Interest-free sales tax deferral scheme granted by State Industries Promotion Corporation of Tamil Nadu Limited (Repayable within one year Rs. 99.50 lakhs, Previous Year : Rs. 104.29 lakhs) 204.78 309.07

204.78 309.07


73Consolidated Schedules

SCHEDULE 4 : FIXED ASSETS Rs. Lakhs

GROSS BLOCK DEPRECIATION/AMORTISATION/IMPAIRMENT NET BLOCKAs at

31-12-08Additions/

AdjustmentsDeductions/ Adjustments

As at 31-12-09

As at 31-12-08


For the year Impairment (See note 2)

As at 31-12-09

As at 31-12-09

As at 31-12-08

Intangible AssetsGoodwill on consolidation 225.44 — — 225.44 — — — — — 225.44 225.44 Tangible AssetsLand freehold 153.86 — — 153.86 — — — — — 153.86 153.86Land leasehold 14.88 — — 14.88 4.50 — 0.16 — 4.66 10.22 10.38Buildings 6892.68 299.06 4.91 7186.83 2317.46 1.77 173.46 136.98 2626.13 4560.70 4575.22Plant, machinery, equipment etc. 29554.46 1091.00 5013.19 25632.27 19020.44 4073.89 1616.23 — 16562.78 9069.49 10534.02Furniture, fixtures and office appliances 2278.23 88.57 148.71 2218.09 1629.02 140.79 138.17 — 1626.40 591.69 649.21Vehicles 696.91 12.31 122.74 586.48 566.65 122.07 37.16 — 481.74 104.74 130.26Total 39816.46 1490.94 5289.55 36017.85 23538.07 4338.52 1965.18 136.98 21301.71 14716.14Previous Year 37403.21 3431.26 1018.01 39816.46 21085.88 595.98 2319.55 728.62 23538.07 16278.39Capital work-in-progress 550.63 1042.32Advances against capital orders 55.59 30.22

606.22 1072.5415322.36 17350.93

Notes :1 Buildings include Rs. 0.12 lakhs (Previous Year : Rs. 0.12 lakhs) being the cost of shares and bonds in co-operative housing societies.2. In accordance with the provisions of the Accounting Standard 28 on Impairment of Assets notified by the Companies (Accounting Standards) Rules 2006, the Company has identified

certain fixed assets that were impaired mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly during current year an impairment loss of Rs. 136.98 lakhs in respect of Dyes and Specialty Chemicals segment (Rs. 12.47 lakhs) and Intermediates and Colours segment (Rs. 124.51 lakhs) has been recognised in the profit and loss account. (Previous Year Rs. 728.62 lakhs in respect of Intermediates and Colours segment).

SCHEDULE 5 : INvESTMENTS (AT COST) 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Non Trade – UnquotedCurrent In fully paid units of Rs. 10/- each9825217 (Previous Year : Nil) Birla Sun Life Saving Fund – Daily Dividend 983.19 — 8883589 (Previous Year : Nil) HDFC Treasury Advantage Fund-Whole Sale Fund – Dividend – Daily 891.16 — 4742864 (Previous Year : Nil) HDFC F R I F – STP-Whole Sale Fund – Dividend – Daily 478.12 — 9776175 (Previous Year : Nil) DWS Ultra Short Term Fund – Dividend – Daily 979.37 — 9019717 (Previous Year : Nil) DWS Cash Opportunity Fund – Dividend – Daily 904.16 — 9695701 (Previous Year : Nil) JM Money Manager Fund – Super Plus Plan – Dividend-Daily 970.08 — 4038543 (Previous Year : Nil) IDFC Money Manager Fund – Dividend – Daily 403.91 — 9471776 (Previous Year : Nil) LIC MF Income Plus Fund – Dividend – Daily 947.18 — 9197118 (Previous Year : Nil) LIC MF Saving Plus Fund – Dividend – Daily 919.71 — 9847865 (Previous Year : Nil) LIC MF Floater Fund – Dividend – Daily 984.80 — Nil (Previous Year : 9346248) Birla Sun Life Short Term Fund – Institutional – Daily Dividend — 935.14Nil (Previous Year : 7999333) Fidelity Cash Fund-Institutional – Daily Dividend — 800.13Nil (Previous Year : 7754587) HDFC Liquid Fund Premium Plan – Dividend-Daily — 950.70Nil (Previous Year : 5571131) Reliance Medium Term Fund – Daily Dividend — 952.41In fully paid units of Rs. 100/- each863340 (Previous Year : Nil) ICICI Prudential Flexible Income Premium Plan Fund – Daily Dividend 912.85 — 957923 (Previous Year : Nil) ICICI Prudential Floating Rate Plan D – Daily Dividend 958.12 — In fully paid units of Rs. 1000/- each91249 (Previous Year : Nil) Reliance Money Manager Fund – Institutional Plan – Daily Dividend 913.53 — 65341 (Previous Year : 89206) DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 653.77 892.0622483 (Previous Year : Nil) UTI Floating Rate Fund STP – Daily Dividend 225.00 — Nil (Previous Year : 83357) TATA Liquid Super High Investment Fund – Daily Dividend — 929.03Total Current 12124.95 5459.47Total Investments – Unquoted 12124.95 5459.47



SCHEDULE 6 : INvENTORIES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs


Stores and spare parts 193.82 248.50

Raw materials 2161.07 3340.38

Packing materials 104.65 98.96



7764.24 10631.55

SCHEDULE 7 : SUNDRY DEBTORS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Secured (Considered good)

Over six months 5.68 9.02

Other debts 1570.88 1349.06

1576.56 1358.08

Unsecured (Considered good, unless otherwise stated)

Over six months (Including doubtful debts Rs. 246.31 lakhs; Previous Year : Rs. 280.89 lakhs) 330.84 396.73

Other debts 12828.06 11745.76

13158.90 12142.49

Less : Provision for doubtful debts 246.31 280.89

14489.15 13219.68

SCHEDULE 8 : CASH AND BANK BALANCES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Cash on hand 4.19 6.66

Cheques on hand 49.27 82.05

With scheduled banks :

On current accounts 1027.21 661.74

On fixed deposit accounts 632.34 171.50

1659.55 833.24

1713.01 921.95



SCHEDULE 9 : LOANS AND ADvANCES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

(Unsecured – considered good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received 3526.18 3676.80

Less : Provision for doubtful advances 63.97 —

3462.21 3676.80

VAT set off admissible 104.89 52.51

Advance payment of Income tax (Net of provision for taxation) 1769.39 1648.99

Balances with customs and excise on current account 312.21 317.45

5648.70 5695.75

SCHEDULE 10 : CURRENT LIABILITIES 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Sundry creditors :

Due to micro enterprises and small enterprises (See Note 7, Schedule 17) 361.14 82.25

Due to others 14168.74 11196.90

14529.88 11279.15

Deposits 1863.03 1443.85

Unpaid dividends* 221.61 160.90

Unclaimed fixed deposits* 0.06 0.15

Unpaid interest on matured fixed deposits* 0.04 0.58

16614.62 12884.63

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

SCHEDULE 11 : PROvISIONS 31-12-09 Rs. Lakhs

31-12-08 Rs. Lakhs

Employee Benefits :

Leave encashment 365.02 491.71

Gratuity 200.73 387.03

Ex-gratia gratuity 69.21 84.42

Others :

Provision for taxation (Net of advance payment of Income tax) 1270.15 1177.43

Proposed dividend (Final) 3999.11 5065.54

Corporate tax on proposed dividend (Final) 679.65 860.89

6583.87 8067.02



Schedulesforming part of the Consolidated Profit and Loss Account

SCHEDULE 12 : OTHER INCOME 2009 Rs. Lakhs

2008 Rs. Lakhs

Dividend on current non-trade investments 407.90 171.56

Export incentives 420.13 482.72

Profit on sale of fixed assets (Net) 80.31 9.58

Cash discounts 39.40 36.15

Rental income 398.25 364.66

Indenting commission 589.29 634.52

Profit on sale of current investments (Net) 0.21 0.29

Miscellaneous 727.68 830.78

2663.17 2530.26

SCHEDULE 13 : COST OF MATERIALS 2009 Rs. Lakhs

2008 Rs. Lakhs

Raw materials consumed 38507.15 42091.18

Packing materials consumed 2279.01 2207.08

Purchases of finished goods 12133.72 13003.39

(Increase)/Decrease in stocks of finished goods and work-in-progress :

Opening stock



6943.71 7907.69

Less : Closing stock



5304.70 6943.71

1639.01 963.98

54558.89 58265.63

SCHEDULE 14 : PERSONNEL COST 2009 Rs. Lakhs

2008 Rs. Lakhs

Salaries, wages, bonus, etc. 4677.67 5256.71

Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 551.95 1028.20

Welfare expenses 929.09 945.00

6158.71 7229.91



SCHEDULE 15 : INTEREST (NET) 2009 Rs. Lakhs

2008 Rs. Lakhs

Interest Paid

Others 100.32 153.38

100.32 153.38

Less : Interest received (Gross) :

Others (Tax deducted at source Rs. 12.69 Lakhs; Previous Year : Rs. 7.71 Lakhs) 83.20 171.67

83.20 171.67

17.12 (18.29)

SCHEDULE 16 : OTHER EXPENDITURE 2009 Rs. Lakhs

2008 Rs. Lakhs

Stores and Spare parts etc. consumed 612.05 606.65

Repairs and maintenance :

Plant and machinery 712.77 896.24

Buildings 218.64 216.51

Others 164.76 187.74

Power and fuel 4595.77 4485.35

Rent (including lease payments) (See note 9, Schedule 17) 555.90 582.10

Rates and taxes (including water charges) 519.90 659.06

Insurance 69.40 110.65

Clearing, forwarding and transport 1337.29 1533.81

Travelling and conveyance 881.57 971.22

Commission 179.83 250.64

Cash discount 11.76 22.37

Other discounts on sales 684.65 1324.79



Excise duty (322.38) (374.50)

Exchange loss (Net) 168.57 158.29

Miscellaneous (See note 11, Schedule 17) 3820.14 3813.78

14340.70 16037.79




BASIS OF PREPARATION

The Consolidated Financial Statements are prepared in accordance with Accounting Standard (AS) 21 on Consolidated Financial Statements notified by Companies (Accounting Standards) Rules, 2006. The Consolidated Financial Statements comprise the financial statements of Clariant Chemicals (India) Limited and its subsidiary viz. Chemtreat Composites India Private Limited (voting power-100%). The said Company became subsidiary on and from February 13, 2006. This subsidiary company is incorporated in India.






II. Excise Duty

Excise duty payable on products is accounted for at the time of despatch of goods from the factories but is accrued for stocks held at the year end.

Excise Duty related to the difference between the closing stock and opening stock of finished goods has been recognised separately in the profit and loss account under Schedule of ‘Other Expenditure’.

III. Research and Development

Revenue expenditure on research and development is written off in the profit and loss account in the year in which it is incurred. Capital expenditure on research and development is treated in the same way as expenditure on fixed assets.

Iv. Employee Benefits

(a) Short term employee benefit obligations are estimated and provided for.

(b) Post employment benefits and other long term employee benefits:

Defined contribution plans :

Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and/or statute and charged to revenue.

Defined benefit plans and compensated absences :

Company’s liability towards gratuity, ex-gratia gratuity and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in revenue.

v. voluntary Retirement Scheme

Expenditure incurred on voluntary retirement scheme is charged to revenue in the year in which it is incurred.

vI. Fixed Assets and Depreciation/Amortisation

(a) All fixed assets are stated at cost less depreciation, wherever applicable. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use. Borrowing cost relating to funds borrowed for acquisition of qualifying assets for the year upto the date the assets are put to use is included in cost.

Notes to the Consolidated Financial StatementsSCheDuLe 17 : Notes on the Consolidated Balance Sheet and Profit and Loss Account for the year ended 31st December, 2009


79Notes to the Consolidated Financial Statements

(b) The cost of leasehold land is amortised over the period of the lease.

(c) Intangible assets except Goodwill on consolidation are being amortised equally over a period of three years.

(d) Depreciation has been calculated on the straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except for :

(i) certain items of furniture, fixture, air conditioners, plant, machinery and equipment on which a depreciation rate of 20% on straight line method is applied,

(ii) electronic data processing (EDP) hardware such as servers on which a depreciation rate of 20% and for other EDP equipments including personal computers and printers on which depreciation rate of 25% on straight line method is applied,

(iii) Motor Cars on which depreciation rate of 25% on straight line method is applied.

(e) Fixed Assets held for disposal are stated at lower of net book value and net realisable value.

vII. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. Previously recognised impairment loss is further provided or reversed depending on changes in circumstances.

vIII. Inventories

Inventories are valued at the lower of cost and estimated net realisable value after providing for obsolescence. The cost of inventories is generally arrived at on the following basis :

Raw materials, packing materials, trading items and stores and spares – Weighted average cost

Finished goods and work-in-progress – Absorption costing at works cost

IX. Sundry Debtors/Loans and Advances

Sundry debtors and loans and advances are stated after making adequate provision for doubtful debts/advances.

X. Investments

Long term investments are stated at cost less provision for diminution in value, other than temporary. Current investments are stated at the lower of cost and fair value. Dividends are accounted for when the right to receive the dividend payment is established.

XI. Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss Account on a straight-line basis over the lease term.

XII. Foreign Currency Translations

(a) Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting year. In respect of items covered by forward contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation of such a forward exchange contract is recognised as income or expense for the period. Foreign currency transactions are accounted at the rate prevailing on the date of transaction.

(b) Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.

(c) Gain or loss arising out of translation/conversion is taken credit for or charged to the Profit and Loss Account.

XIII. Income Tax

Income-tax expense comprises current tax and deferred tax charge or credit. The current tax is determined as the amount of tax payable in respect of the estimated taxable income for the year. The deferred tax charge or credit is recognised using prevailing enacted or substantively enacted tax rates. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation/liabilities.



XIv. Contingencies/Provisions

Provision is recognised when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions except in respect of employee benefits are not discounted to its present value and are determined based on best estimate of the expenditure required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. A contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

2. Segment Information for the year ended 31st December, 2009 (As required by Accounting Standard (AS)-17 Segment Reporting) :

(a) The Company is organised into two primary business segments mainly :

(i) Intermediates and Colours :

Includes pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals and master batches for plastics and nylon fibers.

(ii) Dyes and Specialty Chemicals :

Includes dyestuff synthetic resins, binder materials, auxiliaries and chemicals.


(i) India

(ii) Outside India

(c) Segments have been identified and reported taking into account the nature of products and services, the differing risk and returns, the organisation structure, and the internal financial reporting system.

(d) (i) Segment Revenue and Results :

The expenses which are not directly attributable to the business segment are shown as unallocated corporate cost.

(ii) Segment assets and liabilities :

Segment assets include all operating assets used by the business segment and consist principally of fixed assets, debtors and inventories. Segment liabilities primarily include creditors and other liabilities.

(iii) Assets and liabilities that cannot be allocated among the segments are shown as a part of unallocable corporate assets and liabilities respectively.

Information about primary business segments :

2009 Rs. Lakhs

2008 Rs. Lakhs

Inter- mediates &

Colours*

Dyes and Specialty

Chemicals

Total Inter- mediates &

Colours *

Dyes and Specialty

Chemicals

Total

Revenue (Net)External Sales/Revenue 39266.95 53165.69 92432.64 40169.07 51854.86 92023.93 ResultsSegment Results 8477.04 10758.66 19235.70 4704.42 7040.26 11744.68 Unallocated Corporate Expenses (Net) (917.45) (1270.32)Operating profits 18318.25 10474.36 Interest Income/Dividend Income 491.10 343.23 Interest Expenses (100.32) (153.38)Profit before Exceptional Items and Taxation 18709.03 10664.21 Exceptional items (See note 12, Schedule 17) (2450.46) (48.00)Profit before Taxation After Exceptional Items 16258.57 10616.21 Current Tax/Deferred Tax (5427.34) (3550.26)Fringe Benefit Tax (39.00) (118.50)Short provision for taxation in respect of earlier years (30.77) (248.09)Profit after Tax 10761.46 6699.36



Information about primary business segments : (Contd.)

2009 Rs. Lakhs

2008 Rs. Lakhs

Inter- mediates &

Colours*

Dyes and Specialty

Chemicals

Total Inter- mediates &

Colours *

Dyes and Specialty

Chemicals

Total

Other Information

Segment Assets 19429.34 20580.09 40009.43 20989.52 22413.01 43402.53

Unallocated Corporate Assets 16075.93 8227.81

Total Assets 56085.36 51630.34

Segment Liabilities 6597.21 9039.17 15636.38 4585.83 8065.95 12651.78

Unallocated Corporate Liabilities 1817.98 1505.08

Total Liabilities 17454.36 14156.86

Capital Expenditure 668.46 316.36 984.82 1413.84 1240.40 2654.24

Unallocated Corporate Capital Expenditure 14.43 35.20

Total Capital Expenditure 999.25 2689.44

Depreciation/Amortisation 1008.70 887.46 1896.16 1132.43 1100.77 2233.20

Impairment of Fixed Assets 124.51 12.47 136.98 728.62 — 728.62

Unallocated Corporate Depreciation 69.02 86.35

Total Depreciation/Amortisation/Impairment 2102.16 3048.17

Non-cash Expenses other than Depreciation/Amortisation/Impairment 61.72 63.93 125.65 541.04 298.42 839.46

Unallocated Corporate Non-cash Expenses other than Depreciation/Amortisation/Impairment 64.28 33.20

Total Non-cash Expenses other than Depreciation/Amortisation/Impairment 189.93 872.66


2009 Rs. Lakhs

2008 Rs. Lakhs

India Outside India Total India Outside India Total

External Sales 75075.99 17356.65 92432.64 72990.89 19033.04 92023.93

Segment Assets 36364.76 3644.67 40009.43 40417.60 2984.93 43402.53

Additions to Fixed Assets 984.82 — 984.82 2654.24 — 2654.24

Notes :

1 Total assets exclude the following : (a) Advance payment of income tax Rs. 1769.39 lakhs (Rs. 1648.99 lakhs). (b) Deferred tax assets (Net) Rs. 275.72 lakhs (Rs. Nil).

2 Total liabilities exclude the following : (a) Proposed dividend Rs. 3999.11 lakhs (Rs. 5065.54 lakhs). (b) Corporate tax on proposed dividend Rs. 679.65 lakhs (Rs. 860.89 lakhs). (c) Provision for taxation Rs. 1270.15 lakhs (Rs. 1177.43 lakhs). (d) Deferred tax liability (Net) Rs. Nil (Rs. 254.94 lakhs).

* Products hitherto reported under “Masterbatches” segment is now reported under “Intermediates & Colours” segment since the products are similar in nature.




Relationship : (a) Holding Company : EBITO Chemiebeteiligungen AG, Clariant International AG and Clariant Participations AG, together hold 63.40% equity shares in the

Company, the ultimate holding company being Clariant AG, Switzerland.

(b) Other related parties in the Clariant group where common control exists and with whom the company has transactions : Fellow Subsidiary Companies :

Clariant (Argentina) SA Clariant Masterbatches (Italia) S.p.A.Clariant (Australia) Pty. Ltd. Clariant Masterbatches (Shanghai) Ltd.Clariant (Canada) Inc. Clariant Masterbatches (Thailand) Ltd.Clariant (China) Ltd. Clariant Masterbatches Benelux SAClariant (Colombia) SA Clariant Masterbatches HuningueClariant (Egypt) SAE Clariant Masterbatches Ireland LimitedClariant (Gulf) FZE Clariant Masterbatches Norden ABClariant (Japan) K.K. Clariant Masterbatches UK Ltd.Clariant (Korea) Ltd. Clariant Oil Services UK Ltd.Clariant (Malaysia) Sdn Bhd Clariant Pigments (Korea) Ltd.Clariant (Maroc) S.A. Clariant Pigments (Tianjin) Ltd.Clariant (Mexico) S.A. de C.V. Clariant Prodotti (Italia) S.p.A.Clariant (Pakistan) Ltd. Clariant Production (France)Clariant (Singapore) Pte. Ltd. Clariant Production UK Ltd.Clariant (Thailand) Ltd. Clariant Produkte (Deutschland) GmbHClariant (Tianjin) Ltd. Clariant Produkte (Schweiz) AGClariant (Uruguay) SA Clariant S.A.Clariant Advanced Materials GmbH Clariant Southern Africa (Pty.) Ltd.Clariant Chemicals (China) Ltd. Clariant Specialty Chemicals (Zhenjiang) Co., Ltd.Clariant Chemicals (Taiwan) Co., Ltd. Clariant Specialty Fine Chemicals (France)Clariant Colorquímica (Chile) Ltda. Clariant Trading (China) Ltd.Clariant Corporation Clariant Venezuela, S.A.Clariant Distribution UK Ltd. Dick Peters B.V.Clariant Distribuzione (Italia) S.p.A. K. J. QuinnClariant Export AG PT Clariant IndonesiaClariant Ibérica Producción S.A. Clariant Life Science Molecules (Florida) Inc.Clariant Masterbatch Ibérica S.A. Clariant (Türkiye) Boya ve Kimyevi Maddeler Sanayi ve Ticaret A.S.Clariant Masterbatches (Deutschland) GmbH

(c) Key Management Personnel :

H. Meier : Vice-Chairman & Managing Director (upto 31.12.2009)

During the year following transactions were entered into with related parties :

(i) Holding Company and Fellow Subsidiaries :

2009 Rs. Lakhs

2008 Rs. Lakhs

Holding Company :Transactions during the year :Clariant International AG

Sale of goods 1501.15 1742.65Purchase of goods 9234.75 7673.84Services rendered 377.62 324.08Services received 699.34 644.13Dividend paid 1761.75 607.50Expenses recovered 1.51 19.46

EBITO Chemiebeteiligungen AGDividend Paid 2368.46 816.71

Clariant Participations AGDividend Paid 771.40 266.00

Balances outstanding as at the year end :Amount payable 1142.51 984.03Amount receivable 449.12 676.53



2009 Rs. Lakhs

2008 Rs. Lakhs

Fellow Subsidiaries :Transactions during the year :Sale of goods

Clariant Produkte (Deutschland) GmbH 1419.66 2338.86Clariant Corporation 1239.30 2321.54Clariant (China) Ltd. 2895.33 1524.41PT Clariant Indonesia 1170.42 811.89Others 4474.85 4119.63

Purchase of goodsClariant (Tianjin) Ltd. 51.95 170.67Clariant (China) Ltd. 771.38 1008.24Clariant Corporation 44.82 127.58Others 486.29 211.87

Purchase of capital goodsClariant Masterbatches (Deutschland) GmbH 5.27 170.08Clariant Masterbatches (Italia) S.p.A. 10.00 23.34Clariant Production UK Ltd. 2.97 —

Sale of capital goodsClariant Produkte (Deutschland) GmbH 50.47 —

Services rendered and othersClariant Export AG 308.38 283.67Clariant Produkte (Deutschland) GmbH 0.54 70.55Others 40.52 44.70

Expenses recoveredClariant Produkte (Deutschland) GmbH — 4.49PT Clariant Indonesia 0.22 —

Clariant (Singapore) Pte. Ltd. 0.05 —Others — 0.78

Services received and othersPT Clariant Indonesia 18.49 8.19Clariant (Singapore) Pte. Ltd. 20.67 29.65Clariant Southern Africa (Pty.) Ltd. 27.35 8.86Clariant Produkte (Deutschland) GmbH — 8.93Clariant S.A. — 10.51Clariant (Gulf) FZE 11.37 2.77Others 16.55 17.83

Expenses reimbursed PT Clariant Indonesia 0.76 — Clariant (Malaysia) Sdn Bhd 1.63 —

Balances outstanding as at the year end Amount payable 424.20 520.37Amount receivable 2476.97 1450.59

(ii) Key Management Personnel :Remuneration 217.09 164.97Payable balance 67.58 26.75

During the year following transactions were entered into with related parties : (Contd.)

(i) Holding Company and Fellow Subsidiaries :



4. Contingent liabilities not provided for :

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

I. (a) in respect of income tax matters decided against the Company, in respect of which the Company is in further appeal 1458.40 856.16decided in favour of the Company against which the department is in appeal 14.78 14.78

(b) in respect of sales tax matters 578.58 494.22(c) in respect of excise matters 448.03 455.66(d) in respect of bills of exchange discounted with banks

[since realised Rs. 783.61 lakhs (Rs.17.73 lakhs)] 1119.58 29.60

(e) Other matters in dispute 2.25 2.25(f) Disputed labour matters – Amount not ascertained.In respect of items (a) to (c), (e) & (f) future cash outflows in respect of contingent liabilities is determinable only on receipt of judgements pending at various forums/authorities.

II. On 15th February 2005, the Company had received an order of the Tahsildar, Thane demanding Rs.120.70 lakhs for the lease of land to Thane Municipal Corporation, Fire Brigade and Maharashtra State Electricity Board without obtaining prior permission in writing against which the Company had filed a writ petition on 23rd February 2005 before the Bombay High Court. The Hon’ble High Court has granted interim stay in terms of the petition on 14th July 2005.

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

5. Estimated amount of contracts remaining to be executed on capital account and not provided for 179.15 201.56

6. Deferred taxes :The major components of deferred tax assets and deferred tax liabilities are set out below :

31-12-2009 Rs. Lakhs

31-12-2008 Rs. Lakhs

Deferred tax assets(a) Provision for doubtful debts 105.50 95.50(b) Provision for retirement benefits 215.89 327.47(c) Expenses allowable for tax purposes when paid 53.54 53.54(d) Integration expenses 15.74 78.70(e) Payment/Provision for voluntary retirement scheme 1184.64 552.46(f) Others — 1.23

1575.31 1108.90Deferred tax liabilitiesDepreciation/Amortisation/Impairment (1299.59) (1363.84)Deferred Tax assets/(liabilities) – Net 275.72 (254.94)

7. Amount paid/payable by the Company to Directors (including Managing Director) as remuneration for services rendered in any capacity :

2009 Rs. Lakhs

2008 Rs. Lakhs

Directors’ sitting fees 1.45 0.90Salaries 137.76 136.17Commission 36.75 34.75*Compensation for loss of office 40.83 — Provident fund 11.35 1.89Other perquisites and benefits in cash or in kind 0.40 0.16

228.54 173.87

* Actual paid during the Year Rs. 25.49 lakhs and Rs. 9.26 lakhs reversed during the year.



8. Earnings Per Share :

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Net profit after taxation 10761.46 6699.36

(b) Number of equity shares outstanding 26660745 26660745

(c) Basic and Diluted earnings per share (Rupees) 40.36 25.13

(d) Face value per share (Rupees) 10.00 10.00

9. Assets taken on lease on or after 1st April, 2001 :

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) In respect of operating leases, where lease agreements have been formally entered into, lease payments recognised in the profit and loss account for the year are as follows.Office premises, vehicles and computers 382.43 377.91

(b) There are no restrictions such as those concerning dividends, additional debt and further leasing, imposed by the lease agreements entered into by the Company.

(c) Contingent rent payments in respect of vehicles are dependent upon the excess of actual usage, if any, over stipulated usage.

(d) The total of future minimum lease payments under non-cancellable operating leases are as follows :For a period not later than one year 285.05 326.65For a period later than one year and not later than five years 254.37 343.68Total 539.42 670.33

10. Expenditure on Research and Development :

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Capital expenditure 3.36 9.93

(b) Revenue expenditure charged to profit and loss account 224.20 323.29

227.56 333.22

11. Miscellaneous Expenses in Schedule 16 : Other expenditure include :

Auditors’ remuneration and expenses : (Excluding Service tax)

2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Audit fees 25.00 25.00

(b) Company law matters 0.15 —

(c) Taxation services 0.23 —

(d) Other services 31.20 37.50

(e) Out-of-pocket expenses 0.45 0.11

57.03 62.61

12. Exceptional items in Profit & Loss Account include :

2009 Rs. Lakhs

2008 Rs. Lakhs

Termination benefits to Employees 2810.46 48.00

Income from sale of flexible laminating adhesives business (360.00) —

2450.46 48.00



13. Employee Benefits :2009

Rs. Lakhs2008

Rs. LakhsFunded Unfunded Funded Unfunded

(a) Defined benefit Plans – As per Actuarial valuation as on December 31, 2009 :

Gratuity(i) Expenses recognised in the statement of Profit and Loss Account for the year

1. Current Service Cost 181.10 4.17 190.63 4.362. Interest Cost 178.36 6.86 142.81 6.013. Expected return on Plan Assets (204.25) — (194.58) — 4. Net acturial (Gain)/Loss recognised during the year (133.86) 4.54 234.40 (5.81)5. Expense/(Income) recognised in Profit & Loss Account 21.35 15.57 373.26 4.56 [Gratuity expense/(income) have been recognised in Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc. in “Personnel Cost” under Schedule 14]

(ii) Actual return on Plan Assets for the year1. Expected return on Plan Assets 204.25 — 194.58 — 2. Actuarial Gain/(Loss) on Plan Assets (38.87) — 39.51 — 3. Actual return on Plan Assets 165.38 — 234.09 —

(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end1. Present Value of the Defined Benefit Obligation 2342.20 69.21 2940.12 84.422. Fair Value of Plan Assets 2141.47 — 2553.09 — 3. Net Asset/(Liability) recognised in the Balance Sheet (200.73) (69.21) (387.03) (84.42)

(iv) Change in Defined Benefit Obligation during the year1. Present Value of Obligation at the beginning of the year 2940.12 84.42 2551.45 80.182. Current Service Cost 181.10 4.17 190.63 4.363. Interest Cost 178.36 6.86 142.81 6.014. Benefits Paid (784.65) (30.78) (218.68) (0.32)5. Actuarial (Gain)/Loss on obligation (172.73) 4.54 273.91 (5.81)6. Present Value of Obligation as at the end of the year 2342.20 69.21 2940.12 84.42

(v) Changes in fair value of Plan Asset during the year1. Fair Value of Plan Assets as at the beginning of the year 2553.09 — 2432.22 — 2. Expected return on Plan Assets 204.25 — 194.58 — 3. Contributions made 207.65 — 105.46 — 4. Benefits paid (784.65) — (218.68) — 5. Actuarial Gain/(Loss) on Plan Assets (38.87) — 39.51 — 6. Fair value of Plan Assets as at the end of the year 2141.47 — 2553.09 —

(vi) Major categories of Plan Assets as a percentage of Total Plan Assets1. Central Government Securities 29.64% — 24.84% — 2. State Government Securities 12.32% — 10.03% — 3. Private Sector Bonds 20.90% — 15.21% — 4. Special Deposit Scheme 25.54% — 21.69% — 5. Cash at Bank 1.15% — 1.10% — 6. Investment in Insurance Companies 22.06% — 22.67% — 7. Others (11.61%) — 4.46% —

(vii) Actuarial Assumptions1. Discount Rate 8.0% 8.0% 7.0% 7.0%2. Expected Rate of return on Plan Assets 8.0% — 8.0% — 3. Salary Escalation 4.0%-6.0% 4.0%-6.0% 4.0%-6.0% 4.0%-6.0%

(viii) Experience Adjustments1. Experience Adjustments on Plan Assets (38.87) — — — 2. Experience Adjustments on Plan Liabilities (49.77) 4.54 — —



2009 Rs. Lakhs

2008 Rs. Lakhs

(a) Defined benefit Plans – As per Actuarial valuation as on December 31, 2009 : (Contd.)

Other Long Term Benefits

The Defined Benefit obligations which are provided for but not funded are as under:

Compensated Absence/Leave Salary 365.02 491.71

(b) Gratuity is administered through duly constituted and approved independent trusts and also through Group gratuity scheme with Life Insurance Corporation of India

(c) Future salary increases considered in acturial valuation take in to account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

(d) Basis used to determine expected rate of return on plan assets:

The expected rate of return on plan assets is based on market expectation, at the beginning of the year, for returns over the entire life of the related obligation.

(e) Accounting standard 15 (Revised 2005) “Employee Benefits” requires the disclosure of experience adjustments for past four years, however, the information is given only for the current year.

(f) During the year the Company has recognised the following amounts in the Profit & Loss Account in Schedule 14 : Salaries, wages, bonus etc. includes compensated absences 49.17 93.02 Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc.

includes :Provident Fund & Family Pension 275.30 278.81Superannuation Fund 239.24 370.57Gratuity Fund 36.92 377.82Other Funds 0.49 1.00

14. The Company has entered into an agreement with Laxmi Organic Industries Ltd. on May 15, 2009 for the sale of its business of Diketene and downstream intermediate products together with removable plant and equipment. On receipt of full consideration, the transaction has been concluded in January 2010.


16. The figures in brackets are those in respect of the previous accounting year.


R. A. Shah Chairman





13. Employee Benefits : (Contd.)



(Rs. Million)

Financial Year Ended 31st December Financial Year Ended 31st March

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

I. OPERATING RESULT

Gross Sales 9732.2 10014.5 9517.1 7538.9 9246.5 4035.2 4083.4 3821.7 3310.1 3301.9

Net Sales 9213.4 9163.9 8614.4 6870.4 8479.1 3656.1 3746.8 3492.8 2990.1 2991.8

Gross Earnings Before Depreciation/Impairment and Taxation +2079.4 +1375.7 +1021.3 +655.7 893.1 472.5 380.0 343.7 273.0 236.8

Profit Before Taxation #1631.1 #1072.9 #493.3 #507.8 648.4 *357.8 249.5 214.7 141.6 114.8

Profit After Taxation 1081.4 674.8 317.9 328.7 403.9 155.9 335.7 149.7 90.6 89.8

Equity Dividend 666.5 506.6 266.6 479.9 293.3 69.9 69.9 69.9 58.3 46.6

II. FINANCIAL POSITION

Gross Fixed Assets 3556.6 3985.1 3819.6 3831.7 3850.2 2105.6 1934.0 1973.8 1930.3 1912.7

Net Fixed Assets 1527.3 1646.0 1719.1 1651.8 1601.6 837.2 737.7 804.8 862.9 935.0

Investments 1245.0 578.4 294.3 465.0 1132.6 464.5 204.5 85.0 85.0 87.4

Net Current Assets 698.5 1008.3 1164.8 1128.2 1198.7 743.5 741.5 843.3 982.1 1017.2

Equity 266.6 266.6 266.6 266.6 **266.6 116.5 116.5 116.5 116.5 116.5

Reserves 3211.3 2909.8 2827.6 2835.8 3054.4 1605.7 1529.6 1272.7 1200.6 1303.9

Shareholders' Fund 3477.9 3176.4 3094.2 3102.4 3321.0 1722.2 1646.1 1389.2 1317.1 1420.4

Loans and Deferred Payment Credits 20.5 30.9 40.7 62.1 559.4 339.4 110.4 236.4 474.0 619.2

Capital Employed 3498.4 3207.3 3134.9 3164.5 3880.4 2061.6 1756.5 1625.6 1791.1 2039.6

III. PER EQUITY SHARE

Earnings (Rupees) #40.56 #25.31 #11.92 #12.33 (Not

Annualised)

15.15 13.30 28.82 12.96 7.97 7.45

Dividend 25 19 10 18 11 6 6 6 5 4

# After exceptional items

+ Before exceptional items

* Before prior period items

** Including share capital suspense account

*** In view of the amalgamation w.e.f. April 1, 2005, the figures of the year 2006 are not directly comparable to those of earlier years.

**** Figures are for nine months ended December 31, 2006

Financial Performance10 Years‘ Highlights


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Annual Report 2009Clariant Chemicals (India) Limited

Annu

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www.clariant.in

Clariant Chemicals (India) LimitedRavindra Annexe194 Churchgate ReclamationMumbai 400 020


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