clariant chemicals (india) limited l.: …...annual report 2008 annual report 2008 clariant...

Annu

al R

epor

t 200

8

Annual Report 2008Clariant Chemicals (India) Limited

www.clariant.in

Clariant Chemicals (India) LimitedRavindra Annexe194 Churchgate ReclamationMumbai 400 020

Tel.:

282

1 68

51/ 2

837

6401

, E-m

ail:

info

@dh

oteo

ffset

.net

Our three brand values “value focus”, “service

leadership” and “dialogue commitment” help us to

achieve a unique identity and form the cornerstones of

our relationship with our key stakeholders namely our

customers, employees and investors.

� Value Focus

For the benefit of all stakeholders Clariant will aim

for profitable, sustained growth based on a strategy

linked to binding values.

� Service Leadership

With professional advisory services, an impressive

talent for innovation combined with customized

services and applications, Clariant helps customers

to achieve their production and economic targets.

� Dialogue Commitment

An ability to engage in dialogue, integrity and

trustworthy relationships set Clariant apart.

Clariant’s Brand Values

2 Corporate Management

7 Financial Performance

9 Notice

12 Directors’ Report

16 Management Discussion and Analysis

20 Report on Corporate Governance

28 Auditors’ Report

32 Balance Sheet

33 Profit and Loss Account

34 Cash Flow Statement

36 Schedules to Balance Sheet

41 Schedules to Profit and Loss Account

43 Notes

58 Statement relating to the Subsidiary Company

59 Auditors’ Report on Consolidated Financial Statements

60 Consolidated Financial Statements

81 10 Years’ Highlights

Index

Clariant in India is committed to ensuring sustainable development of our company and planet earth, simultaneously. Caring for greener surroundings, reduction in wastes and emissions, innovating and nurturing a range of green products in our portfolio, enhancing work place safety, etc. are initiatives on which we place a premium. Our range of lead chrome free pigments, non-halogenated flame retardants, heavy metal free masterbatches for food packaging applications, the 4E’s from textile dyes – environment, efficiency, ecology and economy, etc. are but a few examples of how we are nurturing a more safer yet colorful world for our children to inherit !

Welcome to a Sustainable, Colorful World!

Clariant Chemicals (India) LimitedAnnual Report 2008

VISION

MISSION

VALUES

Our VisionWe aim to be the leading service-driven company and the preferred partner in the specialty chemicals industry.

Our MissionOur commitment to service contributes to the success of our customers. We combine leading-edge technology and innovations with superior applications and customer service skills.

Our Values Customer FocusWe concentrate our efforts on the individual requirements of our customers and help them strengthen their competitive position and performance.

Personal EngagementWe achieve results through individual commitment, continual skills development and entrepreneurial behavior.

Team OrientationWe rely on the strength of teamwork to achieve synergies and realize our full potential.

Innovation We utilize our extensive know-how and experience throughout the company to continuously bring new services, applications and products to the market.

Shareholder CommitmentWe strive for enduring value creation for the benefit of our shareholders.

IntegrityWe are a trustworthy, loyal and respectful partner in all our internal and external relationships.

SustainabilityWe contribute towards sustainable development by finding the best balance between environmental, social and economic needs.

1

AUDIT COMMITTEER.A. Shah, ChairmanDiwan A. NandaWalter Kindler

InVEsTOrs’ grIEVAnCE COMMITTEEDiwan A. Nanda, ChairmanHeiner Meier

AUDITOrsA.F. Ferguson & Co.Chartered 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

Corporate Management

R.A. Shah Heiner MeierBansi S. MehtaDiwan A. Nanda B.L. Gaggar

2 Clariant Chemicals (India) LimitedAnnual Report 2008

BOArD OF DIrECTOrsR.A. Shah – Chairman

Heiner Meier Vice-Chairman & Managing Director

Bansi S. Mehta

Diwan A. Nanda

Peter Lindner

Dr. Andreas Walde

Walter Kindler

B.L. Gaggar Director Finance & Company Secretary

Walter KindlerPeter Lindner Dr. Andreas Walde

MAnAgEMEnT COMMITTEEHeiner Meier, ChairmanB.L. GaggarDr. Govind G. PatkarAnjani K. PrasadSahadeo S. Patil

Heiner Meier

B.L. Gaggar

Dr. Govind G. Patkar

Anjani K. Prasad

Sahadeo S. Patil

3

leather

textile

flame retardants

paints & coatings

plastics

personal care

oil services

industrial & home care

masterbatches

anti graffiti coatings

paper chemicals

brake fluids & engine coolants

printing inks

biocides

corrosion inhibitors

construction chemicals

packagingand many more ...

viscose fibres

crop protection


We

touc

h yo

ur li

ves

...

5

Clariant touches your lives almost everywhere. Our presence comes through in very many varied areas ranging from the “stone washed” effects on Denims, water-based paint applications to flame retardants. Our Optical Brightening Agents give your paper the highest whiteness, while our colors impart the deepest shades possible. Our chemicals also help enhance the elegance of leather for fashionable articles and accessories.

You will find us in laundry detergents, with properties that ensure less consumption while imparting requisite washing power. Our raw materials for cosmetics ensure your body care; while our floor cleaner solutions help keep your floors spic and span. Another key innovation is the safety compliant colorants for sensitive applications like children’s toys. One cannot, of course, forget our high performance automotive coatings.

Our masterbatches help create innovative user-friendly packaging – be it attractive color concentrates, brightly colored stadium seats that can weather the elements, PET packaging or even packaging for medical applications. Our tailor-made oil-field chemicals ensure smooth operations from extraction to refining. We help fuel from getting clogged in filters during winters and our deicing fluids enable aircrafts take off and land in snowy conditions.

Our innovation coupled with our passion to deliver consistent quality has helped us to be close to our customers’ exacting needs.

leather

textile

flame retardants

paints & coatings

plastics

personal care

oil services

industrial & home care

masterbatches

anti graffiti coatings

paper chemicals

brake fluids & engine coolants

printing inks

biocides

corrosion inhibitors

construction chemicals

packagingand many more ...

viscose fibres

crop protection


We

touc

h yo

ur li

ves

...

Clariant in India leads the way in being able to deliver customized solutions at a consistently high quality. We are certified for ISO-9001, ISO-14001 and ISO-18001 from International Agency SQS (The Swiss Association for Quality and Management Systems). The Product Safety Lab received the ISO 17025 accreditation by NABL, Govt. of India.

Clariant has made investments in facilities and people while offering a competitive cost structure, in order to remain closer to customers. Our new Paper Service Centre, the Pilot facility for stable fibers, the Technical Service Centre for Pigments, etc. help enhance our customer service levels. Our full-fledged Research & Development, Quality Assurance/Control functions help bring in standardised and efficient solutions. Our Product Safety Lab ensures that critical safety issues are not just compliant to all standards but also create lasting value to our customers and their end-users. Our Businesses hold regular interfaces with our various customers to understand their needs, to develop products that meet those needs and to enhance the value of offerings to their end-users. Our technical service centre network across India render tailor made services, on time, every time to satisfy the dynamic market needs.

Always at your service ...


7

Financial Performance

0

200

400

600

800

1000

1200

0

4

8

12

16

20

24

0

125

250

375

500

625

750

0

2

4

6

8

10

12

Clariant in India leads the way in being able to deliver customized solutions at a consistently high quality. We are certified for ISO-9001, ISO-14001 and ISO-18001 from International Agency SQS (The Swiss Association for Quality and Management Systems). The Product Safety Lab received the ISO 17025 accreditation by NABL, Govt. of India.

Clariant has made investments in facilities and people while offering a competitive cost structure, in order to remain closer to customers. Our new Paper Service Centre, the Pilot facility for stable fibers, the Technical Service Centre for Pigments, etc. help enhance our customer service levels. Our full-fledged Research & Development, Quality Assurance/Control functions help bring in standardised and efficient solutions. Our Product Safety Lab ensures that critical safety issues are not just compliant to all standards but also create lasting value to our customers and their end-users. Our Businesses hold regular interfaces with our various customers to understand their needs, to develop products that meet those needs and to enhance the value of offerings to their end-users. Our technical service centre network across India render tailor made services, on time, every time to satisfy the dynamic market needs.

Always at your service ...



8

0

5

10

15

20

25

30

0

60

120

180

240

300

360

0

700

1400

2100

2800

3500

4200

0

4

8

12

16

20

24

0

250

500

750

1000

1250

1500

0

4

8

12

16

20

24

0

250

500

750

1000

1250

1500

0

4

8

12

16

20

24

0

300

600

900

1200

1500

1800

0

4

8

12

16

20

24

9

NOTICE is hereby given that the Fifty-second 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 Wednesday, April 29, 2009 at 04.00 p.m. to transact the following business:

Ordinary Business:

1. To consider and adopt the Balance Sheet as at December 31, 2008 and the Profit and Loss Account for the year ended on that date together with the Reports of the Directors and Auditors thereon.

2. To declare a dividend for the year 2008.

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

4. To appoint a director in place of Mr. P. Lindner, who retires by rotation and being eligible, offers himself for re-appointment.

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

“RESOLVED THAT M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai, be and are hereby appointed as Auditors of the Company, in place of the retiring Auditors, M/s. A.F. Ferguson & Co. to hold office from the conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting, on a remuneration to be approved by the Board of directors and reimbursement of travelling and out -of-pocket expenses and service tax and other applicable taxes.”

Special Business:

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 and in terms of Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, approval of members be and is hereby accorded to the re-appointment of Mr. H. Meier as Vice-Chairman & Managing Director of the Company for a period of five years with effect from April 1, 2009 upon the terms and conditions including remuneration, benefits and perquisites payable or extended to him as set out in the draft agreement between the Company and Mr. Meier, copy whereof initialed by the Chairman for the purpose of identification has been placed before this meeting.

RESOLVED FURTHER THAT in the event of absence or inadequacy of net profit in any financial year, the remuneration payable to the Vice-Chairman & Managing Director shall be governed by Section II of Part II of Schedule XIII of the Companies Act, 1956, or any statutory modification thereof.

NoticeRESOLVED FURTHER THAT, Mr. Meier 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 the Board of Directors of the Company be and is hereby authorised to alter and vary the terms as to remuneration (including perquisites) within the ceiling limits in that behalf laid down in Schedule XIII to the Companies Act, 1956 as in force from time to time.

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 (herein after 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 for the purpose of giving effect to this resolution, any Director and the Company Secretary of the Company be and are hereby authorised to execute under the Common Seal of the Company the necessary agreement with Mr. Meier.”

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

“RESOLVED THAT pursuant to Section 31 and other applicable provisions of the Companies Act, 1956 including any statutory modification thereto or any re-enactment thereof for the time being in force (“the Act”) , the Articles of Association of the Company be and are hereby altered by inserting the following new Article 8A under the heading “Buy-Back of Shares and Securities” and the marginal note “ Buy back” after the Article 8 :

“The Company and/or the Board of Directors shall have power, subject to and in accordance with Sections 77A, 77AA, 77B and other applicable provisions of the Act or the corresponding provisions, rules, regulations and guidelines prescribed by the Government of India, the Securities and Exchange Board of India or any other authority, to purchase any of its own fully paid up shares, securities or other specified securities whether or not they are redeemable and may make a payment out of its free reserves or securities premium account of the Company or proceeds of any shares or other specified securities, provided that no buy back of any kind of shares or other securities shall be made out of the proceeds of an earlier issue


of the same kind of shares or same kind of other specified securities or from such other sources as may be permitted by law on such terms and conditions and in such manner as may be prescribed by the law from time to time in respect of such shares”; and

“RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, matters and things as may be necessary, usual or expedient to give effect to this resolution”.

By Order of the Board of Directors, For Clariant Chemicals (India) Limited

B. L. Gaggar Director Finance & Company Secretary

February 20, 2009.

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. 6 and 7 set out above is hereto annexed.

3. Profiles of the Directors being reappointed, as required under clause 49 of the Listing Agreement, are provided in the report on Compliance of Corporate Governance.

4. The Register of Members and Share Transfer Books of the Company will remain closed from Wednesday, April 15, 2009 to Wednesday, April 29, 2009 both days inclusive, for the purpose of payment of dividend, if declared at the Annual General Meeting.

5. The 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 14, 2009 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 14, 2009. The Company will dispatch the dividend warrants from April 30, 2009 onwards.

6. The amount outstanding in unpaid dividend account in respect of financial year 2001-2002 will be transferred to the ‘Investor Education and Protection Fund’ maintained with the Central Government after the end of 7 (seven) years after July 26, 2009. 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 and 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, for 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 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. 6

Mr. H. Meier was appointed, as the Vice-Chairman & Managing Director of the Company, for a period of three years, with effect from April 1, 2006 on the remuneration, terms and conditions as approved by the members in the Annual General Meeting held on July 27, 2006, which was subsequently approved by the central Government pursuant to section 269 and other applicable provisions of the Companies Act, 1956. The proposed resolution seeks his re-appointment with effect from April 1, 2009 and has been approved by the Board of Directors.

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

11

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

A. REMUNERATION

(i) Salary: Rs.7,88,000 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 per month. Salary will be subject to the deduction of Indian Income tax at the applicable rates, under the Income-tax Act, 1961.

(ii) Contribution to Provident Fund At such maximum rate of percentage of the basic salary as is

singly or put together are not taxable under the income tax Act, 1961 as may be decided by the Board of directors from time to time.

(iii) Commission: Subject to the overall ceilings laid down under Sections 198

and 309 of the Companies Act, 1956, at a fixed sum in the range of Rs.21,00,000/-to Rs.30,00,000/- per annum, as may be decided by the Board from year to year.

B. PERQUISITES, BENEFITS AND FACILITIES

(i) Housing: Suitable residential accommodation, free of cost with all

facilities, amenities and services (including gas, electricity, water and furnishings). In case he does not opt for Company provided accommodation at any time, he shall be paid house rent allowance of a sum not exceeding 60% 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.

(ii) Medical Reimbursement: Reimbursement of medical expenses incurred by Mr. Meier for

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

(iii) 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 leave accumulated but not availed of will not be allowed to be encashed. The Company will bear the full cost of leave passage for Mr. Meier 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. Meier and his family once in a year not exceeding the cost of return passage to his home country.

(iv) Club Fees: Mr. Meier shall be entitled to the reimbursement of fees of

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

(v) Personal Accident Insurance: The Company shall pay an annual premium of a sum not

exceeding Rs.10,000/- to a personal accident insurance policy for Mr. Meier.

(vi) Reimbursement of expenses for returning to home country: Mr. Meier 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 packing, forwarding, loading/unloading as well as freight, insurance etc. in connection with the moving of his personal effects.

(vii) Car, Driver & Telephone:

The Company will provide Mr. Meier 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. Meier.

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

C. ENTERTAINMENT EXPENSES: The Company shall reimburse entertainment expenses actually and

properly incurred by Mr. Meier 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.

D. TERMINATION: This agreement may be terminated by either party by giving to the

other party six months’ notice of such termination.

E. VACATION OF OFFICE: If at any time during the tenure of his appointment as the Vice-

Chairman & Managing Director of the Company, Mr. Meier ceases to be in the 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.

A copy of the aforesaid agreement to be entered into between the Company and Mr. H. Meier as a Vice-Chairman & Managing Director is available for inspection by the members of the Company at the Registered Office of the Company between 11.00 a.m. to 1.00 p.m. on any working day.

Item No. 7

With changing business conditions and the laws in India and abroad it is thought appropriate to equip the Articles with the provision for buy back of securities.

The Board therefore recommends that the special resolution at item no. 7 of the Notice be passed.

A copy of the existing Articles of Association of the Company with a copy of the proposed alteration in the resolution at item no. 7 of the notice will be open for inspection by the members at the registered office of the Company between 10 a.m. to 12 noon on any working day of the Company until the date of the Annual General Meeting or any adjournment therof.

None of the Directors of the Company are interested in the resolution at item No. 7 of the notice.

By Order of the Board of Directors, For Clariant Chemicals (India) Limited

B. L. Gaggar Director Finance & Company Secretary

February 20, 2009.

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

Notice


The directors have pleasure in presenting their Fifty second report and Audited Financial Statements for the year ended December 31, 2008.

Financial Results

The financial performance of the Company for the year ended December 31, 2008 is summarized below: Rupees- Lakhs

2008 2007

Sales (Gross) 100145.34 95171.59

Less: Excise duty (8505.87) (9027.36)

Net sales 91639.47 86144.23

Profit before exceptional items & taxation 10776.60 8067.30

Less: Exceptional items (48.00) (3133.45)

Profit before taxation 10728.60 4933.85

Less: Provision for taxation (3732.21) (1754.71)

Less: Short provision for taxation – Prior years (248.09) —

Profit after tax 6748.30 3179.14

Add: Balance brought forward from previous year 950.36 1350.83

Amount available for appropriation 7698.66 4529.97

Appropriations :

General reserve 674.83 317.91

Proposed dividend 5065.54 2666.07

Corporate tax on dividend 860.89 453.10

Tax on dividend of previous period — 142.53

Balance carried forward to Balance sheet 1097.40 950.36

Review of Operations

Global recession and unprecedented demand slowdown has impacted the operations of the Company during the last quarter of 2008. However, the excellent performance of your Company for the first 9 months of 2008 has resulted into overall reasonable growth in terms of sales and net profits as compared to previous year. The following ratios appropriately reflect your Company’s operational performance during the year under review:

2008 2007

Sales growth (%) 6.4 (6.0)

Domestic sales growth (%) 7.0 (2.1)

Export sales growth (%) 4.0 (18.4)

PBDIT ( % to sales ) 14.9 8.4

PAT ( % to sales ) 7.4 3.7

ROCE (%) 21.0 10.1

Debt : Equity ratio 0.01 0.01

Earnings per share ( Rs.) 25.31 11.92

Cash earning per share ( Rs.) 36.5 20.0

Book value per share ( Rs.) 119.1 116.1

Directors’ ReportDividend

Your directors recommend a dividend of Rs. 19 per share (190%) for the financial year 2008 as compared to Rs.10 per share (100%) for the previous year. The total payout on account of dividend and tax thereon for the year is Rs. 5926.43 lakhs as compared to Rs 3119.17 lakhs for the previous financial year.

Divestment of Business

The Company has entered into negotiations with Bostik India Pvt. Ltd. for sale of its non-core flexible laminating adhesives business for a total consideration of Rs. 3.6 crores payable in cash towards sale of business and non-compete fees.

In order to ensure the uninterrupted supply of products covered, Company may enter into tolling agreement with Bostik India Pvt. Ltd. to continue manufacturing of products in its own processing plant at Roha for a period to be agreed upon and on terms and conditions as may be recorded in the tolling agreement.

Fixed Deposits

The Company has not accepted fixed deposits during the year under review. There were no overdue deposits except unclaimed deposits of Rs 15000/- as at December 31, 2008.

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 (IEPF) 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, 2008.

Wholly-owned Subsidiary

The Company has applied to the Government of India for exemption from attaching the financial statements of Chemtreat Composites India Private Limited, a 100% subsidiary of your Company, since the audited consolidated financial statements are presented in the annual report. Your directors believe that the consolidated financial statements present a true and fair view of the state of affairs of your Company as a whole.

The report along with the audited accounts of the subsidiary company – Chemtreat Composites India Private Limited is annexed to this report along with the statement pursuant to section 212 of the Companies Act, 1956. However, in the context of the mandatory requirement to present consolidated accounts, which provide members with a consolidated position of the Company including its subsidiary, at the first instance, members are being provided with the report and accounts of the Company and the

13Directors’ Report

consolidated accounts treating these as abridged accounts as contemplated by section 219 of the Companies Act, 1956. Members who wish to receive the full Report and Audited Accounts including the report and accounts of the subsidiary will be provided with it upon receipt of a written request.

Consolidated Financial Statements

In accordance with Accounting Standard 21 notified by Companies (Accounting Standards) Rules, 2006, the audited consolidated financial statements form part of this annual report.

Management Discussion and Analysis ReportA detailed report on management’s discussion and analysis in terms of clause 49 of the listing agreement forms part of this annual report.

Corporate Governance

A detailed report on Corporate Governance forms part of this annual report. Your Company has generally complied with the requirements and disclosures that have to be made in this regard. The Auditor’s certificate on compliance with Corporate Governance requirements by the Company is attached to the report on Corporate Governance.

Particulars of Employees

The 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 forms part of this report. However, as per the provision of section 219(1)(b)(iv) of the Companies Act, 1956, the report and the statement of accounts are being sent to all shareholders excluding the above statement. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Directors

The Board of directors of the Company at the meeting held on February 20, 2009 appointed Mr. Walter Kindler as a director of the Company to fill the casual vacancy caused by the resignation of Mr. Dominik Strebel with effect from February 20, 2009.

In accordance with the provisions of the Companies Act, 1956 and the articles of association of the Company, Mr. R.A.Shah and Mr. P. Lindner, the directors, are due to retire at the forthcoming annual general meeting, and being eligible, have offered themselves 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 Statement

In 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, 2008 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 Outgo.

Information 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.

Auditors

M/s. A.F. Ferguson & Co., Chartered Accountants, retires at the conclusion of the ensuing Annual General Meeting and expressed their desire not to seek re-appointment. The audit committee of the Board of directors recommends the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants as statutory auditors for the financial year 2009. M/s. Deloitte Haskins & Sells have confirmed their willingness to accept the office, and have given a certificate to the effect that their appointment, if made, would be within the limits prescribed under section 224 (1B) of the Companies Act, 1956.

Cost Audit

The 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 2008.

Acknowledgement

The Board of directors places on record its sincere appreciation for the dedicated efforts put in by all employees, their commitment and contribution ensuring sustained growth 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 expresses their appreciation of the assistance and co-operation extended by the bankers and unstinted support received from Clariant group companies.

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

For and on behalf of the Board of Directors,

R. A. Shah ChairmanMumbai, February 20, 2009


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, 2008.

FORM-A

Particulars with respect to conservation of energy

A. Power and Fuel Consumption:

2008 2007

1. Electricity

a) Purchased:

Units (in ‘000 KwH) 51119 56387

Total amount (Rs. Lakhs) 2316 2537

Rate per Unit (Rs.) 4.53 4.50

b) Own Generation:

i) Through diesel generator

Units (in ‘000 KwH) 1138 840

Units per Litre of diesel oil 3.19 3.24

Cost per Unit (Rs.) 11.56 10.18

ii) Through Steam turbine/ Generator NIL NIL

2. Coal

Quantity (MT) 3825 2570

Total cost (Rs. Lakhs) 250 122

Average rate (Rs. per Kg.) 6.54 4.75

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


Total Cost (Rs. Lakhs) 698 611


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

FORM-B

Form 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 portfolio consist of product improvement and process optimization with a view to reduce cost and introduction of new products in wide range of specialty chemical intermediates, dyes, pigments, pigment preparations and surfactants for targeted markets.

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

The new products and process cater the needs of variety of customer segments and aim to reduce costs. Development of eco-friendly processes results in less quantity of effluent and emission. Also, designing of ‘safe’ i. e. non toxic products conform to product safety regulations.

3. Future plan of action :

R&D will focus on projects leading to further cost reduction and reduced load on environment

4. Expenditure on R & D :

2008 2007

(Rs. Lakhs) (Rs. Lakhs)

(a) Capital 9.93 4.58

(b) Revenue 323.29 338.70

(c) Total 333.22 343.28

(d) Total R & D expenditure as a percentage of total turnover 0.36 % 0.40 %

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, their own experimental data bank, published literature etc. and thereafter adapt the same to the Company’s infrastructure, effect improvements to the products and processes of the Company including containment of pollution and control of effluents.

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

Annexure to Directors’ Report

15Annexure to Directors’ Report

Benefits derived from these efforts include process rationalisation, 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 is furnished

(a) Technology imported : NIL

(b) Year of import : N.A.

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

Foreign exchange earnings and outgo

2008 2007 (Rs. Lakhs) (Rs. Lakhs)

1. Total foreign exchange earned 19734.02 18665.71

2. Total foreign exchange used 22923.72 20322.28




Financial and Operational Performance

Despite all the challenges in the market place, the Company during the year under review registered an overall growth of 6.4 percent in sales, 32.9 percent in profit before depreciation, impairment, interest, exceptional items and tax and 112.3 percent in net profit after tax over previous year. Effective cost management and constant review of its pricing policy has resulted into further improvement in the operating profit margins (PBDIT) from 12.0 percent to 15.0 percent. The overall efficiency has resulted into higher profit after tax (PAT) of 7.4 percent to sales as compared to 3.7 percent in the previous financial year. Of the total sales revenue of the Company for the year, 20 percent is contributed by exports.

These results were achieved by the Company in very difficult and challenging macro economic environment and intensifying competition.

The Company remains a zero debt company. There are no long-term borrowings. Short-term borrowings are restricted to the need based working capital requirements. The Company has created an excellent track record of efficient management of working capital. Net cash flow from operating activities during the year was Rs. 8069.22 lakhs. The ratio of inventory to sales 11.5 percent and receivables to sales 14.4 percent is one of the best in the specialty chemical industry. Funds surplus to the operational needs have been prudently invested to earn reasonable returns with high degree of safety. A sum of Rs.5784.47 lakhs (previous year Rs. 2943.27 lakhs) stands invested in mutual funds at the end of the year.

During the year under review, all the plants had smooth operations and overall capacity utilisation was on need-based requirement. ISO 9001 certification from KPMG Quality Registrar for the Company’s quality system in design, development, manufacturing and supply of its products covered under the certificate reflects the Company’s continuous commitment towards quality and standards. The product safety laboratory of the Company set up at Kolshet in Thane has been assessed and accreditated in accordance with the standard ISO/IEC 17025:2005 in the field of chemical testing and a Certificate of Accreditation has been issued by the National Accreditation Board for Testing and Calibration Laboratories (NABL), Department of Science and Technology, India. The Company had accident free year with no reportable accidents at any of its manufacturing sites.

Segment-wise Performance

In accordance with the Accounting Standard-17 issued by the Institute of Chartered Accountants of India, the Company has considered business segment as primary segment and accordingly has classified its range of products into three reportable business segments based on characteristics of products, production process and the class of customers.

Management Discussion & AnalysisThe overall segment wise financial performance of the Company is summarised below:

(Rs. Lakhs)

Segments 2008 % to Total 2007 % to Total

Sales Sales

Intermediates & Colours 36267 40 % 32474 38 %

Dyes & Speciality Chemicals 51470 56 % 50791 59 %

Masterbatches 3902 4 % 2879 3 %

Total 91639 100 % 86144 100 %

1. Intermediates and Colours:

The Company is a market leader in organic pigments and serves the needs of the paints, printing-inks, plastics, rubber, detergents, cosmetics and other industries. The product range of the Company covers high performance pigments for automotive coatings, precision pigments for non-impact printing and specialty chemicals for a diverse range of applications from colouration of viscose, soaps and detergents, stationery to flame retardants and waxes for road construction.

The Company is promoting safer pigments to replace lead and chrome and is spreading awareness on uses of non-halogenated flame retardants.

The total sales under this segment of Rs. 36267 lakhs for the year comprises of Rs. 22384 lakhs (62%) from domestic and Rs.13883 lakhs (38%) from export sales. The segment contributes 40 percent to the total sales and registered a growth of 12 percent.

2. Dyes and Specialty Chemicals:

Dyes and specialty chemicals segment of the Company caters to the requirement of user industries in textile, leather, paper, detergents and personal care. Given the product range, 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 market place.

Clariant’s expertise in dyes and specialty chemicals makes the Company perfect partner in every step of textile process chain from fiber to finish. Market leadership in India in the leather business is fortified with comprehensive range of dyes and wet end chemicals that caters to the retaning, dyeing and finishing of all types of leather. The Company has established itself as one of the preferred supplier of dyes, optical brightening agents, surface and process chemicals for paper industry.

The total sales under this segment of Rs. 51470 lakhs for the year comprises of Rs. 46782 lakhs (91%) from domestic and Rs. 4688 lakhs (9%) from export sales. Dyes and specialty chemicals segment has contributed 56 percent of total sales revenue for the year.

17Management Discussion & Analysis

3. Masterbatches:

The Masterbatch segment of the Company deals in colour and additive concentrates and special mixtures of these compounds for use by automotive, textile and technical fibres, electronic and electrical devices, home appliances, toys, medical devices, packaging and sports goods. The segment has been recognized as an important supplier of colour concentrates, combibatches and additives and range of products which caters to industries in HDPE, LDPE, PP, lonomer, engineering plastics, polymers, PVC, monofilament, multi-filaments, staples and nonwoven fibre. The plastics and polymer segment has experienced mix trends while packaging and textile segment witnessed good growth during the year.

The Masterbatch segment recorded sales of Rs 3902 lakhs during the year as compared to Rs. 2879 lakhs in the previous year registering a growth of 36 percent. It has contributed about 4 percent to total sales revenue of the Company for the year.

Internal Control Systems

The Company is committed to ensuring a comprehensive internal control structure across its operations to ensure that all assets are adequately safeguarded and protected against loss from unauthorized use or disposition. The Company has established well defined written policies and processes across the organisation covering all major activities including authority for approvals. In all cases where monetary decision is involved, various limits and authorities are in place. Structured management information and reporting system together with exhaustive budgetary control process for all major operational activities form part of overall control mechanism to ensure that requisite information related to operations is being reported and is available for control and review.

The Company has hired the services of a professional firm of chartered accountants to function as independent internal auditors and to assist the management in effective discharge of its responsibilities by furnishing it with findings, observations and pertinent comments, adequacy of internal controls, analysis and recommendations concerning the activities covered for audit and reviewed by it during the year. Findings of internal audit reports and effectiveness of internal control measures is reviewed by top management and audit committee of the Board.

Human Resources

The key to the success of the Company lies in its people whose skills, expertise, and talent help the Company to achieve and sustain its market position. It is the people’s commitment, technical know-how, innovative ability and performance driven mindset that enable Clariant to react swiftly and creatively to the evolving customer and market needs. The Company involves its employees at all level in personal development programmes and provides the requisite training at regular intervals. Specialized training and business exposure with a focus on building leadership in all areas of the Company’s operations was a major initiative taken up during the year. The process of improving organizational and human capability was continued through competencies mapping of managerial positions, development of leadership and building of talent for the future. HR systems were improved, refined and upgraded to provide better services to business and functions.

Cordial relations with the employees prevailed at all the Company locations during the year. The Company during the year signed long-term settlement with its workers union at its plant in Kolshet, Balkum, Kanchipuram and Cuddalore.

The total number of employees on the rolls of the Company as at December 31, 2008 was 1172.

Industry Structure and Development

The chemical industry is one of the oldest industries in India. It not only plays a crucial role in meeting the daily needs of the common man, but also contributes significantly towards industrial and economic growth of the country. Indian chemical Industry is worth USD 43 billion, which accounts 1.34% of the global market size of USD 3.2 Trillion (2007). India’s share in global export and import is 1.1% and 1.5% respectively. The industry is highly diversified and meets varying demands of the society in all walks of life. It contributes 2.8% GDP of the country.

India produces a large number of fine and specialty chemicals having diverse applications. The broad segments of these are plastic additives, water and paper treatment, paints and coatings, life science and functional chemicals. With overall capacity of about 8 million MT per annum, the total size of industry is approx. USD 12 billion and is expected to grow upto USD 43 billion by 2020 with compound annual growth rate (CAGR) of 11%.

The dyestuff sector is one of the important segments of the chemical industry in India, having forward and backward integration with variety of sectors like textiles, leather, paper, plastic, printing inks and foodstuffs. The textile accounts for the largest consumption of dyestuffs at nearly 70%. India has emerged as a global supplier of dyestuffs and dye intermediates, particularly for reactive, acid, vat and direct dyes. India accounts for approximately 6% of the world production. The industry is highly fragmented with concentration in Maharashtra and Gujarat.

The CAGR in production of major chemicals, including dyes and dyestuffs during 2002-03 to 2006-07 is 4.69% and the annual growth in imports and exports of these major chemicals is 14.79% and 14.13% respectively. Dyes and dyestuffs accounts for maximum growth of 28.06% in imports whereas export growth is led by organic chemicals which account for 20.48%.

The industry has had a tough time in domestic markets due to lowering of entry barriers and reduction in import tariffs. Most of the segments of the dyes and specialty chemical industry have been facing poor growth either due to low demand, surging imports or poor performance by user industry segments. In view of severe competition, profit margins are under pressure. The share of industries in unorganised sector constitutes very high percent of total size of dyes and specialty chemical industry.

The plastics & polymer segment in Indian market is still very attractive due to 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. International demand is helping to up-grade the quality of products, technical services, cost competitiveness and processing efficiencies, etc.

The Company has diversified into product ranges covering different segments of specialty chemical industry operating in four major business divisions. These are:


Textile, Leather and Paper division caters to the needs of the apparel and textile industry providing chemicals, dyes and a wide range of value adding characteristics for fabrics such as flame retardance, resistance to microbial attack or damage from UV radiation, and ability to repel water and stains; products for dyeing and finishing for all leather sectors including shoe, bag, automotive and furniture industry including value added products to provide resistance to water and aging, colour, fade and abrasion; optical brightening agents and colorants for all sectors of paper industry from tissues to cardboard and recycled products.

Pigments & Additives division covers industrial, decorative and automotive coatings; complete range of colorants from pigments, pigment preparations and dyes, waxes and other additives covering all polymers in wide range of markets; colorants and additives for broad range of printing technologies covering decorative laminates, publication, packaging, offset, gravure, flexographic, screen printing, electro photographic and inkjet printing; colorants and additives for variety of applications including adhesives, specialty polymers, intumescent systems, anodized aluminum, cosmetics, detergents, stationery and agro chemical industry.

Functional Chemicals division of the Company provides non-ionic, anionic and cationic surfactants, polymers, glyoxylicacid, glyoxal and downstream products for oil, detergents, cosmetics, crop protection, paints and coating, construction, metal working, polyester, mining and range of other industries.

Masterbatches division caters to the needs of colour and additives concentrates and performance solutions for the plastics industry with strong position in packaging, consumer goods, automotive and spin dyeing of synthetic fibre market segments.

Outlook

Due to global melt down, chemical industry world over is passing through difficult time forcing shut down of crackers and down stream units. Many of the global players in specialty chemical segment have downsized their operations and are preparing themselves to face the uncertain future challenges. India is no exception to the woes of this meltdown and the economy has seen sharp reversal in fortunes since October 2008. The country seems to be heading for a significant fall in GDP growth from 9% recorded in 2007-08 to around 7.1% in 2008-09. A glimpse of the deteriorating economy can be gauged from the fact that exports declined by 12.11% in October 2008, for the first time in last 3 years. Indian Rupee continues to remain weak loosing almost 25% over January 08.

The Indian chemical industry recorded a consistent growth in production since February 2006. But this record was broken in September 2008, when the production of basic chemicals and chemical products recorded a 3.8% fall. The loosing streak continued with a 5.4% fall in October 2008 and a 2.2% fall in November 2008. The sharp fall in crude oil prices triggered a massive correction in petrochemicals and intermediate prices. As the prices went for a free fall, users decided to draw on stocks. Meanwhile global demand came down. A deadly combination of these two factors coupled with adverse global environment meant a fall in production and demand for chemicals.

In view of very large capacities, countries like China may resort to dumping of chemical products in Indian markets to the detriment of Indian chemical Industry. The performance of dyes and specialty chemical industry for the

year under review is unlikely to be different from the chemical industry in general. While slow growth in textile exports has affected the demand for dyestuffs and textile chemicals, performance of leather industry is badly affected due to fall in demand for leather goods from US and European markets. Painting and coating industry is severally affected due to slow down of auto and construction industry both in domestic and international markets.

The positive factor for Indian chemical industry is the demand for its products that is largely driven by domestic market and considering very low per capita consumption ratio, the impact of slow down may not last for a long period. Government’s initiative to promote six Petroleum, Chemicals and Petrochemical Investment Regions (PCPIR) is hoped to change the fortunes for Indian chemical industry. Despite the difficult time, the dyestuff and specialty chemical industry holds a lot of promise for India. The industry is potential powerhouse benefiting from comparative low labour costs, excellent army of technical manpower, capabilities to research and development facilities, huge but undeveloped domestic market and potential to increase its share in global markets.

Diversified product range, proactive preparedness in adjusting to demand and supply levels and aggressive marketing strategies has provided a cushion to the Company to withstand the pressure of global meltdown and downturn in the industry. The Company is gearing itself for sustaining its market position by adjusting to the market environment through improved service levels and continuous emphasis on cost management.

Opportunities and Threats

Although small in size, the Indian chemical industry is net exporter. Per capita consumption in each of its industry segment is very low compared to other countries. India has inherent advantages to exploit its huge limonite reserve for production of titanium dioxide, large sugar industry base for production of alcohol and value added products, large coastline to manufacture magnesia from sea water.

Despite the rapid progress made by dyestuffs industry in domestic markets, India’s per capita consumption of dyestuffs at 50 gms is still one of the lowest compared to the global average of 200 gms. The opportunity therefore exists for increasing the consumption level. Emergence of new fashions, development of new machinery and environmental regulation like lower effluent load and low water consumption per kg per substrate, offers new opportunity for the dyes and specialty chemical industry to develop research oriented high performing cost effective products to meet requirements of masses in different climatic conditions.

India being leader in knowledge power and its vast experience in handling customer demands, opportunities exist for rapid export growth by development of innovative products meeting high standards of quality. This can be possible by creating the brand value “Made in India”

The important challenge in marketing area that specialty chemical industry is facing is to improve the level of quality performance of products and services. One of the common concerns hindering India’s export growth is poor logistic facilities for containers handling at ports and speed of transportation. Further, the growth of dyes, pigments and specialty chemical industry is directly related to overall growth of industry segments to which it

19Management Discussion & Analysis

caters for. Slow down in economy and under performance by any of the user industry will have negative impact on the industry.

Industries in unorganised sector account for a substantially large share in production of dyes and chemicals. Any lapse in quality of products manufactured and non-compliance of pollution and environment related norms set up by the government might have adverse impact both in local and upcountry markets.

China at feverish pace has put up massive chemical projects and complexes that not only meet their own demand but also global demand that will be emerging for the next several years. Because of this China not only controls market but also the pricing policy. Indian chemical industry has threats of dumping at rock bottom prices by developed economies like China due to meltdown in their countries and their ability to sustain due to large capacities. Already, import prices of wide range of basic chemicals including polymers, petrochemicals and agrochemicals etc. have crashed substantially in last few months.

With strong technology support from parent company and efficient development facility already available on site, your Company is capable of exploiting the opportunities and contributing positively in its increasing market base.

The Company has set up world class product safety laboratory with excellent product testing facilities and processes that enable it to undertake a comprehensive range of tests encompassing process tests, ecological tests and test for banned and restricted substances. These tests cover the entire gamut of post manufacturing hazards of products and thus offer opportunities to provide solutions to export oriented industry in textile and leather segment. To enhance the service levels to the customers, a facility that consolidates Clariant’s leading application services and expertise for customers in the technical textile sector was set up during the year.

Risks and Concerns

Risk taking is intrinsic to business growth. All business organisations face risks either from internal operations or from external environment. The base of any business is a healthy appetite for risk. This is why one of the greatest and most important challenges for an organisation is to define the optimal risk level for its business to ensure that its activities produce risk adjusted returns.

The risks to which the Company is exposed and the initiatives taken by the Company to mitigate such risks are given below.

Hazard risks are related to natural hazards arising out of nature of product/ operations, accidents, fire, earthquake or cyclone etc.

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. Risk arising from product liability is protected through insurance policies or limited through contractual agreements wherever possible.

Financial risks are concerned with volatility in interest and exchange rates, credit, asset-liability mismatch.

The Company is exposed to forex risks arising from various currency exposures, primarily with respect to USD, GBP, Euro and Swiss Franc. The Company has an appropriate policy in place and covers the risk partly through hedging by means of forward transactions. Company has written policy to deal with risk involved in investment of surplus funds. Since Company has no borrowings from banks / financial institutions, interest risk is minimal. Company has put in place system driven credit control procedure and proactive approach to prepare liquidity planner and constant review thereof to ensure that at any given point of time there is adequate cover available to extinguish its liabilities.

Operational risks are associated with systems, processes and people and covers areas such as succession planning, attrition and retention of people, operational failure or interruption, disruption in supply chain, failure of research & development facilities, and faulty application of information technology and non-compliance of regulatory provisions.

The Company is exposed to all such operational risks. However, the policies and process framework of the Company supported by the strong management information system and group guidelines provide proactive approach to mitigate operational risks to a great extent. 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 virus free environment. The Company has put in place system driven legal compliance manual and certification process that ensures compliance of regulatory provisions and the same is reviewed by the Board of directors.

Strategic risks arise from inability to adjust to changes in the environment such as arising from acquisition or merger, customer priorities, customer loyalty, competition threats etc.

Being a multinational company and its own expertise in successful implementation of mergers, the Company is better placed to mitigate risk arising out of such strategies. Company’s approach in providing solution and servicing its customer for over five decades, its attitude towards the customers to consider them as its partners in progress provide the Company requisite comforts to mitigate risks arising out of competition and customer loyalty.

Cautionary Statement

Certain statements under “Management Discussion & Analysis” may be forward looking statement within the meaning of applicable securities laws and regulations. The forward looking statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied from the statement since the Company’s operations are influenced by many external and internal factors beyond the control of the Company.




Company’s philosophy on Corporate Governance envisages the attainment of the highest levels of transparency, accountability and equity, in all facets of its operations, and all its interactions with the stakeholders including shareholders, employees, customers, government, suppliers and lenders and to build the confidence of society in general. The Company believes in adopting the philosophy of professionalism, transparency and accountability in all areas and is committed to pursue growth by adhering to the highest standards of Corporate Governance.

1. Group Structure:

Clariant Chemicals (India) Limited 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. Clariant Chemicals (India) Limited operates in four Business Divisions viz. TLP (Textile, Leather & Paper), P&A (Pigments and Additives), Functional Chemicals and Masterbatches and these are structured in three business segments classified as Intermediates & Colours, Dyes & Specialty Chemicals and Masterbatches.

2. Board of Directors:

The key to good corporate governance is a well functioning, informed Board of directors consisting of a core group of excellent,

Report on Corporate Governanceprofessionally acclaimed non-executive directors who understand their dual role of appreciating issues put forward by management, and discharging their fiduciary responsibilities towards the Company’s shareholders as well as its creditors.

2.1. Composition:

The Board has seven members with a non-executive Chairman. The Independent Directors on the Board are experienced, competent and highly respected professionals from their respective fields. 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. Dominik Strebel resigned with effect from February 20, 2009 and Mr. Walter Kindler is appointed as Director in the casual vacancy caused by the resignation of Mr. Strebel.

All the Directors except Mr. H. J. Meier are subject to retirement by rotation. Mr. H.J. Meier was appointed as Vice-Chairman & Managing Director on contractual basis for a period of three years commencing from April 1, 2006.

The composition and category of the Board of Directors as at 31st December, 2008, 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:

Particulars of AttendanceNo. of other Directorships and Committees memberships/ Chairman-

ships in Indian Public Companies#

Name of the Director CategoryNumber of

Board MeetingsLast AGM held on

April 17, 2008

Other Directorships* as on

December 31, 2008

Committee Memberships

Committee Chairmanships

Held Attended

Mr. R. A. ShahDIN 00009851

Non-Executive Independent 4 4 Attended 14 10 4

Mr. H. MeierDIN 00726512

Executive 4 4 Attended None 1 None

Mr. P. LindnerDIN 01417833

Non-Executive 4 1 Attended None None None

Dr. A. WaldeDIN 01417867

Non-Executive 4 1 Attended None None None

Mr. B.S. MehtaDIN 00035019

Non-ExecutiveIndependent

4 4 Attended 14 10 5

Diwan A. NandaDIN 00034744

Non-ExecutiveIndependent

4 1 Absent 5 3 1

Mr. Dominik StrebelDIN 01859786

Non-Executive4 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.

21Report on Corporate Governance

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

Mr. R. A. Shah

Mr. R.A. Shah is a leading Solicitor and a Senior Partner of M/s. Crawford Bayley & Co., a firm of Advocates & Solicitors. He joined the Board of the Company in August 1976. He specialises in a broad spectrum of Corporate Laws in general, with special focus on foreign investments, joint ventures, technology and licence agreements, intellectual property rights, mergers and acquisitions, industrial licensing, antitrust laws and company law. He is director on the Board of various public limited companies and is the Chairman of the Board in many Companies. He is a member of the Managing Committee of Bombay Chamber of Commerce, Indo-German Chamber of Commerce. He is also the Chairman of the Audit Committee of the Company.

Mr. P. Lindner

Mr. P. Lindner holds a Diploma in Industrial Business from the Chamber of Commerce, Frankfurt am Main, Germany. He has relevant experience of over 40 years in the specialty chemical business. He is presently the Regional President, Asia-Pacific Region of Clariant International Ltd. Mr. Lindner joined the Board of the Company in October, 2001.

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. Four meetings were held during the year ended December, 31, 2008. These were held on February 21, 2008, April 17, 2008, July 24, 2008 and October 23, 2008.

To enable the Board to discharge its responsibilities effectively and take informed decisions, the necessary information is made available to the Board. The information provided as part of the agenda papers are generally sent a week in advance of the Board Meeting.

The Board has complete and unrestricted access to any information required by them to understand the transactions and take decisions.

The Agenda of the Board of Directors Meeting interalia include the following:

• Annualrevenueandcapitalinvestmentbudgets;

• Theunauditedquarterly,half-yearlyfinancialresultsandtheaudited 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;

• Investmentincapitalprojectsofmaterialinnature;

• TheminutesoftheBoardmeetingsofsubsidiarycompany;

• Minutes of the meetings of Board, Audit and Investor’sgrievance committees, as also the resolutions passed by circulation;

• Internal Audit reports and the status on implementation ofsuggestions;

• CostauditandSecretarialauditreports;

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

• Makingofloansorinvestmentofsurplusfunds;

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

• Appointment of key management positions below the Board level;

• Issues relating to shareholders- such as ratification oftransfers, demat status, pending grievances, issue of duplicate share certificates, etc;

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

• Fatalorseriousaccidents,dangerousoccurences,anymaterialeffluent or pollution problems;

• Defaultsinpaymentofstatutorydues,ifany;

• Review of foreign exchange exposure and exchange ratemovement, if material;

• ContractsinwhichDirector(s)aredeemedtobeinterested;

• Mattersrequiringstatutory/Boardapprovals;

• Reviewofrelatedpartytransactions;

• Status on Compliance of regulatory / statutory and listingrequirements;

• Issue/revocationofPowerofAttorney;

• CommissionpayabletoDirectors;

• GeneralnoticesofinterestofDirectors.

2.4 Board Committees:

The Board has constituted two committees viz., Audit committee and Investor Grievance Committee. The roles and responsibilities assigned to these Committees are covered under the terms of reference approved by the Board and are subject to review by the Board from time to time. The minutes of the meetings of these committees are placed before the Board for their discussions and noting. The details as to their composition, terms of reference, number of meetings and related attendance etc. of these committees are provided below :

3. Audit Committee:

3.1 Composition:

The management is primarily responsible for internal controls and financial reporting process. The Statutory auditors are responsible for performing independent audit of the financial statements in accordance with the accepted auditing and accounting standards.

Mr. R.A. Shah, Diwan A. Nanda and Mr. Walter Kindler are the present members of the Audit Committee. 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. 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. J. Meier, Vice-Chairman & Managing Director attends 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 under review, four meetings of the Audit Committee were held on February 21, 2008, April 17, 2008, July 23, 2008 and October 21, 2008. Incase of the meeting held on April 17, 2008 instead of two independent directors only one independent Director was present as the other independent director was unable to attend the meeting.

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 3

Mr. Dominik Strebel Non-Independent Member 4 1

3.2 Scope of Audit Committee:

The Audit Committee assists the Board in its responsibility to overseeing the quality and integrity of the accounting, auditing and reporting practices of the company and its compliance with the legal and regulatory requirements. The committee also reviews the appointment, independence and performance of statutory auditors, the performance of internal auditors and the Company’s risk management policies. The terms of reference of the audit committee are in accordance with clause 49(II) of the listing agreement entered into with the relevant stock exchanges and include:

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

■ Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of statutory auditors and fixation of fee for audit and other services.

■ Reviewing with the management, the annual financial statements before submission to the Board for approval, with particular reference to :

• Matters required to be included in the Director’sresponsibility statement to be included in Directors’ Report in terms of section 217 (2AA) of the Companies Act, 1956;

• Change, if any, in accounting standards, policiesandpractices and the reasons for the same;

• Majoraccountingentriesinvolvingestimatesbasedonthe exercise of judgment by the management;

• Significantadjustmentmadeinthefinancialstatementsarising out of audit findings;

• Disclosureofrelatedpartytransactions;

• Qualificationsindraftauditreport.

■ Reviewing with management, the quarterly financial statements / results before submission to the Board;

■ Reviewing with the management, the performance of Statutory and Internal auditors, adequacy of internal control systems;

■ Discussion with statutory auditors, about the nature and scope of audit as well as areas of concern;

■ Reviewing of internal audit reports, discussion with internal auditors and significant findings and follow up thereon;

■ Review of cost audit report;

■ Review of statement of significant related party transactions;

In pursuing its role, the Audit Committee has powers to investigate any activity within its terms of reference, to seek information from any employee and obtain outside legal and professional advice and to secure attendance of outsiders with relevant expertise, if it considers necessary. The draft minutes of the audit committee meetings are circulated among members before the same is confirmed and placed before the Board.

4. 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 sought the expert legal advice of M/s. Crawford Bayley & Co., Advocates & Solicitors in certain matters and a sum of Rs. 3,65,363 has been paid as professional fees to the said firm during the year ended December 31, 2008. 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. R. A. Shah.

The yearly increment to the remuneration payable to Mr.H.J. Meier, Vice-Chairman and Managing Director is decided by the Board of Directors within the limits approved by the members pursuant to provisions of the Companies Act, 1956. The remuneration comprises of salary, provident fund contribution, performance linked bonus, perquisites and benefits as per rules of the Company. The service contract with the Vice-Chairman & Managing Director for a period of three years which ends on March 31, 2009 is being renewed, subject to approval of shareholders, for a further period of 5 years and can be terminated by giving six months notice in writing by either party.

The Non-Executive Indian Directors are paid sitting fees for attending each meeting of the Board and / or committee thereof. Each of these Directors are also paid commission on an annual basis in accordance with the approval granted by the members at the Annual General Meeting held on April 17, 2008 pursuant to the provisions of Section 198, 309 and other applicable provisions of the Companies Act, 1956.

The details of remuneration, sitting fees and commission paid / payable to the directors for the year ended December 31, 2008 are as under:


Rupees

Name of Director Sitting feesSalary, Perqui-

sites, Contribution to Provident Fund

Commis-sion

Total

Mr. R. A. Shah 40,000 NIL 3,00,000 3,40,000

Mr. H. Meier NIL 1,38,22,381 26,75,000 1,64,97,381

Mr. B. S. Mehta 20,000 NIL 2,50,000 2,70,000

Diwan A. Nanda 30,000 NIL 2,50,000 2,80,000

5. Investors’ Grievance Committee:

The Investor’s Grievance Committee comprises of Diwan A. Nanda non-executive independent director as Chairman and Mr. H. Meier Vice-Chairman & Managing Director as a member. The committee, inter alia, approves issue of duplicate 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 Balance Sheet, non receipt of declared dividends 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 two times on February 21, 2008 and October 21, 2008 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 subsequent Board meeting.

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 practising Company Secretary to perform Secretarial Audit every quarter. No non-compliance from established procedures is reported.

There was no investor grievance which remained unattended and pending as on December 31, 2008.

6. Subsidiary Company:

The Company does not have a 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 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. H. Meier, Mr. Walter Kindler and Mr. B.L.Gaggar are the Directors of Chemtreat Composites India Private Ltd.

7. 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 VenueDate and

TimeSpecial Resolutions Passed

49thY. B. Chavan Auditorium, Gen Jagannath Bhosale Marg, Mumbai

July 27, 20063.00 p.m.

Appointment of Mr. H. J. Meier as Vice-Chairman and Managing Director of the Company

50th

Y. B. Chavan Auditorium, Gen. Jagannath Bhosale Marg, Mumbai

April 19, 20074.00 p.m.

No special resolution

51stY. B. Chavan Auditorium, Gen Jagannath Bhosale Marg, Mumbai

April 17, 20084.00 p.m.

i) Enhancement of the borrowing limits of the Company from Rs. 1250 Mio. to Rs. 3000 Mio.

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

There was no postal ballot conducted during 2008 and in any of the preceding 3 years.

8. Disclosures:

8.1 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.

8.2 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.

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, 2008”.

H. J. Meier Vice-Chairman & Managing Director

8.3 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 are holding any shares in the Company as on December 31, 2008.

9. Means of Communication:

The Company has 30,685 shareholders as on December 31 2008. 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 acts as 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.

The Annual General Meeting is the principal forum for face-to-face communication with shareholders, where the Board responds to the specific queries of the shareholders.

Quarterly results, approved by the Board of Directors 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 Economic Times / Business Standard and prominent vernacular publications such as Maharashtra Times / Nav Shakti / Sakal.

10. General Shareholder Information:

10.1 Annual General Meeting

Date & Time:

Wednesday, April 29, 2009 at 04.00 p.m.

Venue:

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

10.2 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:

• On a show of hands: one vote for a member present inperson;

• On a poll: one vote for each equity share registered in thename of the member or held by the beneficial owner;

• Proxyhasnorighttospeak.

10.3 Financial Calendar The Company’s financial year is period of twelve months from

January to December.

Announcement of Audited/ Unaudited Results

Financial Year January-December

2008

Financial YearJanuary - December 2009

(Proposed)

January-March April 17, 2008 Last week of April, 2009

April-June July 24, 2008 Last week of July, 2009

July-September October 23, 2008 Last week of October, 2009

October-December February 20, 2009 Last week of February, 2010

Annual General Meeting April 29, 2009 Last week of April, 2010

10.4 Dates of Book Closure

January to December 2009

January to December 2010 (Proposed)

Book Closure datesApril 15, 2009 to April 29, 2009 (Both days inclusive)

Second fortnight of April 2010

Payment of Dividend On or after April 30, 2009 Immediately after AGM

10.5 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, 2009 to both the Stock Exchanges.

10.6 Stock Code

Name of the Stock Exchange Stock Code No. Closing Price as on 31.12.2008

BSE CLARICHEM 154.05

NSE CLNINDIA 154.90

Company Registration Number with ROC

CIN : L24110 MH 1956 PLC 010806 ISIN : INE492A01029

10.7 Stock Market Data Price Rupees per share

Month Bombay Stock Exchange (BSE) National Stock Exchange (NSE)

2008 High Rs. Low Rs. Volume (Nos.) High Rs. Low Rs. Volume

(Nos.)

January 348.90 225.00 300053 349.90 229.00 101251

February 290.00 245.10 83932 297.95 232.00 42877

March 266.50 220.25 190977 288.00 223.80 83940

April 254.00 227.00 50406 252.00 223.20 32750

May 250.95 222.00 41945 245.05 220.80 23880

June 236.00 198.30 32850 228.95 199.00 22007

July 246.00 190.00 152239 244.95 189.20 98551

August 258.60 226.75 228881 259.50 228.05 222343

September 240.00 191.75 89752 244.95 180.00 245216

October 215.00 150.00 123651 222.35 155.00 59629

November 189.00 148.55 168718 197.90 149.00 140240

December 160.00 145.25 203523 159.90 144.50 65446


10.9 Address for correspondence

Registrar & Share Transfer Agents: M/s Sharepro Services (India) Pvt. Limited, Samhita Warehousing Complex, Warehouse No. 54 Plot No. 13-A B Sakinaka, Andheri (East), Mumbai - 400072. Tel. No. 022-677203400 Fax : 28508927 Email: [email protected] Contact Person: Mrs. Indira Karkera/Miss Priya E-mail ID under clause 47(f) of the Listing Agreement : [email protected]

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, proof of identification whenever change of address is to be effected.

In case 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 data relating to 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. As and when required by the Company, the share transfer agent obtains details regarding beneficial owner data including addresses from the National Securities Depository Limited or the Central Depository Services (India) Limited.

For any assistance from the Company, members may contact Mr. Satish P. Bhattu, Assistant Company Secretary at Ravindra

Annexe, 194, Churchgate Reclamation, Mumbai – 400 020. The Company periodically reviews the operations of registrar & share transfer agents and an independent audit/ verification is carried by qualified professional for efficiency and effectiveness of services at regular intervals.

10.10 Share Transfer System

Transfer of shares held in physical mode is processed by Sharepro Services (India) Private Limited and approved by Director-Finance & Company Secretary pursuant to the powers delegated to him by the Board of Directors of the Company.

During the year ended December 31, 2008, 29 approvals for transfer/ transmission of 29,956 shares in physical mode were accorded with an average interval of 15 days between approvals.

10.11 Shareholding Pattern as on December 31, 2008

Category No. of Equity shares held

Percentage of shareholding

A Promoters’ Holding

Foreign Promoters

i) EBITO Chemiebeteiligungen AG

ii) Clariant International AG

iii) Clariant Participations AG

8167080

6075000

2660000

30.63

22.79

9.98

Sub-Total 16902080 63.40

B Institutional Investors

(a) Mutual Funds 1644458 6.17

( b )

Financial Institutions

i) General Insurance Corporation

of India and its subsidiaries

ii) Nationalised Banks

579446

12652

2.17

0.05

(c) Foreign Institutional Investors 51715 0.19

Sub-Total 2288271 8.58

C Others

(a) Domestic Companies 811267 3.04

(b)Non Resident Indians/Overseas Corporate Bodies

112503

0.43

(c) Indian Public 6546624 24.56

Sub-Total 7470394 28.02

D Non-Promoters’ Holding

Sub-Total (B+C) 9758665 36.60

Total 26660745 100.00

As on December 31, 2008, in all 2,55,44,001 shares constituting 95.81 per cent of the total issued capital is held in demat form.

10.8 Performance of Company Shares to broad based index (BSE Sensex)


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

As at December 31, 2008

As at December 31, 2007

Name 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 Templeton M.F. A/c. Franklin India Flexicap Fund Nil Nil 864136 3.24

5 UTI (thru it various schemes) 566297 2.12 566297 2.12

6 Birla Sun life Trustee Co. Pvt. Ltd.A/c. Birla dividend yield Plus 187408 0.70 356627 1.34

7 Prudential ICICI Trust Ltd. TAX Plan 225000 0.84 300000 1.13

8 UTI Master Value Fund 289071 1.08 289071 1.08

10.13 Distribution of shareholdings as at December 31, 2008

No. of equity shares heldShareholders Equity Shares held

Numbers % No. of shares %

1-500 28508 92.364 2835811 10.637

501-1000 1418 4.594 1040352 3.902

1001-2000 556 1.801 807012 3.027

2001-3000 137 0.444 341251 1.280

3001-4000 65 0.211 226585 0.850

4001-5000 54 0.175 249122 0.934

5001-10000 67 0.217 488061 1.831

10001 & above 60 0.194 20672551 77.500

Total 30865 100.00 26660745 100.00

10.14 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.

10.15 ADR/ GDR/ Warrants

The Company has not issued any GDR/ ADR/Warrants or any other convertible instruments.

10.16 Plant Locations

The Company’s manufacturing facilities are located at

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

(b) Kolshet Road, Thane – 400607 (Maharashtra)

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

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

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

(f) 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, Taluka Khalapur, Khopoli - 410203. District Raigad, Maharashtra.

11. Additional Information:

11.1 Dividend for the year ended December 31, 2008

The dividend recommended by the Board for the year under review will be paid after approval of shareholders at the forthcoming Annual General meeting to all those shareholders whose names appear-

(i) 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 14, 2009 and

(ii) 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 14, 2009. The Company will dispatch the dividend warrants on or after April 30, 2009.

11.2 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 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 2000-2001 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 7 years period for payment of the dividend pertaining to financial year 2001-2002 will expire on 25.07.2009 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 payment Date of completion of seven years

2001-2002 26.07.2002 25.07.2009

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


11.3 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.

11.4 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.

11.5 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.

11.6 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.

12. 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,


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 on December 31, 2008, 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 the representations made by the Directors and Management, and subject to the observation with regard to attendance issue at the audit committee meeting held on April 17, 2008 under the caption “Audit Committee” in the report on Corporate Governance, we certify that the Company has complied in all material respects with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

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

For A. F. Ferguson & Co. Chartered Accountants

A. C. Khanna Partner

Membership No. : 17814Mumbai: February 20, 2009


1. We have audited the attached Balance Sheet of Clariant Chemicals

(India) Limited , as at December 31, 2008 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;

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

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, 2008 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, 2008

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, 2008;

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.



Membership No. : 17814

Mumbai: February 20, 2009

29

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, 2008.]

(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)

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) 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, on 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.

(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, 2008 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 to which the amount Relates

Forum where dispute is pending

Commissi- onarate

Appellate authorities & Tribunal

High Court

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, 1995-96, 2000-07 408.64 – – 408.64

1994-96, 1999-00, 2000-05 – 35.14 – 35.14

Total 408.64 35.14 – 443.78

Name of Statute (Nature of Dues)

Period to which the amount Relates

Forum where dispute is pending

Commissi- onarate

Appellate authorities & Tribunal

High Court

Total Amount

Service Tax

2002-03, 2003-04, 2004-05, 2005-06 6.75 – – 6.75

2004-05 – 5.12 – 5.12

Total 6.75 5.12 – 11.87

Income Tax (Tax /

Interest)

A.Y. 1986-87, 1987-88, 1992-93 , 1994-95, 1999-00 to 2005-06

447.41 – – 447.41

A.Y. 1995-96, 2003-04 – 8.75 – 8.75

Total 447.41 8.75 – 456.16

(x) The Company does not have any accumulated losses at the

end of the financial period and has not incurred cash losses

during the financial period 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.

(Rs. In Lakhs)

31

(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.



Membership No. : 17814

Mumbai: February 20, 2009

Annexure to the Auditor’s Report


Balance Sheet as at 31st December, 2008

Schedule

31–12–08Rs. Lakhs


SOURCES OF FUNDSShareholders’ funds

Share capital 1 2666.07 2666.07

Reserves and surplus 2 29097.55 28275.68

31763.62 30941.75

Loan funds

Unsecured loans 3 309.07 407.16

309.07 407.16

Deferred tax liability – Net (See note 6, Schedule 17) 254.94 433.23

32327.63 31782.14

APPLICATION OF FUNDSFixed assets 4

Gross block 38797.09 36413.30

Less : Accumulated depreciation and impairment 23390.54 21005.66

Net block 15406.55 15407.64

Capital work–in–progress and advances, etc. 1053.83 1783.46

16460.38 17191.10

Investments 5 5784.47 2943.27

Current assets, loans and advances

Inventories 6 10543.98 11271.04

Sundry debtors 7 13210.41 14133.88

Cash and bank balances 8 842.31 1320.25

Loans and advances 9 6397.96 7123.61

30994.66 33848.78

Less: Current liabilities and provisions

Liabilities 10 12844.86 17216.58

Provisions 11 8067.02 4984.43

20911.88 22201.01

Net current assets 10082.78 11647.77

32327.63 31782.14

Notes on balance sheet and profit and loss account 17

For and on behalf of the Board,

R. A. Shah Chairman H. Meier Vice-Chairman & Managing DirectorB. S. Mehta Director Diwan A. Nanda Director B. L. Gaggar Director Finance & Company Secretary

Mumbai, 20th February, 2009

Per our report attached




33

Profit and Loss Accountfor the year ended 31st December, 2008

Schedule

2008Rs. Lakhs

2007Rs. Lakhs

INCOME Sales – Gross 100145.34 95171.59 Less: Excise duty 8505.87 9027.36 Sales – Net 91639.47 86144.23 Other income 12 2533.68 2439.23

94173.15 88583.46EXPENDITURE Cost of materials 13 58150.05 55263.22 Personnel cost 14 7229.91 7108.83 Interest (Net) 15 (18.29) 120.31 Depreciation/Amortisation 4 2251.60 2145.74 Impairment of fixed assets 4 728.62 — Other expenditure 16 15842.89 16615.08

84184.78 81253.18Less: Service charges recovered 788.23 737.02

83396.55 80516.16PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 10776.60 8067.30Exceptional items (See note 23, Schedule 17) 48.00 3133.45PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 10728.60 4933.85Provision for taxation Current tax 3792.00 2195.00 Deferred tax (178.29) (548.59) Fringe benefit tax 118.50 108.30 (Excess)/Short provision for taxation in respect of earlier years 248.09 — PROFIT AFTER TAXATION 6748.30 3179.14Balance brought forward from previous year 950.36 1350.83Available for appropriation 7698.66 4529.97APPROPRIATED AS FOLLOWS General reserve 674.83 317.91 Proposed dividend 5065.54 2666.07 Corporate tax on proposed dividend 860.89 453.10 Corporate tax on dividend of Previous period — 142.53 Balance carried to the balance sheet 1097.40 950.36

7698.66 4529.97Notes on balance sheet and profit and loss account 17Basic and diluted earnings per share (in Rupees) (See note 15, Schedule 17) 25.31 11.92

Face value per share (in Rupees) 10.00 10.00




Per our report attached to the Balance Sheet





Cash Flow Statementfor the year ended 31st December, 2008

2008 Rs. Lakhs

2007 Rs. Lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit after exceptional items and before taxation 10728.60 4933.85

Adjustments for :

Depreciation / Amortisation 2251.60 2145.74

Impairment of fixed assets 728.62 —

Unrealised foreign exchange (gain) / loss (Net) 59.96 18.05

Interest income (171.67) (239.02)

Dividend income (171.56) (184.22)

Loss / (profit) on sale of assets (Net) (20.66) (190.97)

Loss / (profit) on sale of investments (Net) (0.29) (0.47)

Amortisation / Charge of voluntary retirement scheme compensation — 177.25

Provision for doubtful debts (Net) 200.11 (0.10)

Provision for leave encashment 4.52 (165.63)

Provision for ex–gratia gratuity 4.24 (9.85)

Provision for gratuity 267.80 (160.65)

Interest expenses 153.38 359.33

Assets written–off 390.63 663.62

Operating profit before working capital changes 14425.28 7346.93

Adjustments for :

Trade and other receivables 653.07 (297.12)

Inventories 727.06 1546.62

Trade, other payables and provisions (4447.67) (1418.45)

Cash generated from operations 11357.74 7177.98

Direct taxes paid– (Net of refunds) (3288.52) (2818.59)

Net cash from operating activities 8069.22 4359.39

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets (2669.18) (3826.29)

Sale of fixed assets 49.71 469.40

Purchase of investments (42571.83) (38078.77)

Sale of investments 39730.92 39786.55

Loans given to subsidiary (75.00) (120.00)

Loans repaid by subsidiary — 300.00

Interest received 171.67 390.30

Dividend received 171.56 184.22

Net Cash from / (used in) investing activities (5192.15) (894.59)

35

2008 Rs. Lakhs

2007 Rs. Lakhs

C. CASH FLOW FROM FINANCING ACTIVITIES :

Cash credit and packing credit (Net) — (142.44)

Repayment of borrowings (98.09) (71.80)

Interest paid (147.17) (307.51)

Dividend / dividend tax paid (3109.75) (5585.66)

Net Cash used in financing activities (3355.01) (6107.41)

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) (477.94) (2642.61)

CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 1320.25 3962.86

CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (Refer Schedule 8) 842.31 1320.25

Notes :

1. The Cash flow has been prepared under the “Indirect Method” as set out in Accounting Standard–3 on Cash flow statement issued by the Institute of Chartered Accountants of India.

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

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

Cash Flow Statement









SCHEDULE 3 : UNSECURED LOANS 31–12–08Rs. Lakhs


From others:

Interest–free sales tax deferral scheme granted by State Industries Promotion Corporation of Tamil Nadu Limited (Repayable within one year Rs. 104.29 lakhs, Previous Year: Rs. 98.09 lakhs) 309.07 407.16

309.07 407.16

SCHEDULE 1 : SHARE CAPITAL 31–12–08Rs. 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

Schedules forming part of the Balance Sheet

SCHEDULE 2 : RESERVES AND SURPLUS 31–12–08Rs. Lakhs


Capital reserveAs per last Balance sheet

730.11

730.11

Capital redemption reserveAs per last Balance sheet

137.50

137.50

Securities premium accountAs per last Balance sheet

3545.65

3545.65

Investment allowance reserveAs per last Balance sheet

20.00

20.00

General reserveAs per last Balance sheet Add : Transfer from Profit and loss account

22892.06

674.83

22574.15

317.91

23566.89 22892.06

Profit and loss account 1097.40 950.36

29097.55 28275.68

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.

37

SCHEDULE 4 : FIXED ASSETS

GROSS BLOCK DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCK

As at 31–12–07

Additions/ Adjustments (See note 2)

Deductions/ Adjustments (See note 2)

As at 31–12–08

As at 31–12–07


For the year (See note 26, Schedule 17)

Impairment (See note 3)

As at 31–12–08

As at 31–12–08

As at 31–12–07

Tangible Assets

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

Land leasehold 14.88 — — 14.88 4.35 — 0.15 — 4.50 10.38 10.53

Buildings 6116.42 664.05 9.40 6771.07 2067.35 2.94 168.86 80.09 2313.36 4457.71 4049.07

Plant, machinery, equipment etc.

27006.92

2614.41

712.18

28909.15

16880.08

322.57

1672.85

648.53

18878.89

10030.26

10126.84

Furniture, fixtures and office appliances

2320.58

91.72

152.24

2260.06

1507.49 133.44

253.09

—

1627.14

632.92

813.09

Vehicles 809.48 28.63 141.20 696.91 546.39 136.39 156.65 — 566.65 130.26 263.09

Total 36413.30 3398.81 1015.02 38797.09 21005.66 595.34 2251.60 728.62 23390.54 15406.55

Previous year 37516.86 2778.04 3881.60 36413.30 21799.47 2939.55 2145.74 — 21005.66 15407.64

Capital work–in–progress 1030.37 1756.50

Advances against capital orders 23.46 26.96

1053.83 1783.46

16460.38 17191.10

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 . Adjustments are mainly on account of reclassification of certain assets.

3 . In accordance with the provisions of the Accounting Standard 28 on Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has identified certain fixed assets in respect of the Intermediates and colours segment that were impaired during the year mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly an impairment loss of Rs. 728.62 lakhs has been recognised in the profit and loss account for the year.


Rs. Lakhs

SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31–12–08Rs. Lakhs


Long Term

Non Trade – Unquoted

In Subsidiary Company

500000 (Previous year: 500000) fully paid equity shares of Rs. 10/- each in Chemtreat Composites India Pvt Ltd 325.00 325.00

Total Long Term 325.00 325.00

Current


In fully paid units of Rs. 10/– each

7754587 (Previous year : 8094818) HDFC Liquid Fund Premium Plan – Dividend – Daily Reinvest 950.70 992.41

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

5571131 (Previous year : NIL) Reliance Medium Term Fund – Daily Dividend Plan 952.41 —

7999333 (Previous year : NIL) Fidelity Cash Fund (Institutional) – Daily Dividend 800.13 —


SCHEDULE 5 : INVESTMENTS (AT COST) (Contd.) 31–12–08Rs. Lakhs


NIL (Previous year : 5521028) Kotak Liquid (Institutional Premium) – Daily Dividend — 675.11

NIL (Previous year : 9488974) Birla Cash Plus –Instl. Prem.–Daily Dividend–Reinvestment — 950.75


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

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

Total Current 5459.47 2618.27

Total Investments – Unquoted 5784.47 2943.27

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

January to December 2008

Nos. Rs. Lakhs

Non trade Current – Unquoted


Birla Sun Life Cash Plus – Instl. Prem. Daily Dividend Reinvestment 42304048 4238.65

Canara Robeco Liquid Fund – Institutional – Daily Dividend Reinvest. 4490027 450.84

DSP BlackRock FMP 3M Series 13 – Institutional Daily Dividend 7172609 717.48

DWS Insta Cash Plus Fund – Institutional Plan – Daily Dividend 4515202 452.40

Fidelity Cash Fund (Institutional) – Daily Dividend 2956512 295.72

HDFC Liquid Fund Premium Plan –Dividend–Daily Reinvestment 31805676 3899.31

HDFC Cash Management Fund – Savings Plus Plan – Wholesale – Daily Dividend Reinvest 19575972 1963.77

ICICI Prudential Institutional Liquid Plan–Super Institutional Daily Div. 4521403 452.16

Kotak Liquid (Institutional Premium) – Daily Dividend 50418311 6165.20

Kotak Flexi Debt Scheme – Daily Dividend 7038841 706.08

LICMF Liquid Fund – Dividend Plan 4100253 450.21

LICMF Liquid Plus Fund – Daily Dividend Plan 1505539 150.56

Reliance Liquid Fund – Treasury Plan – Institutional – Daily Dividend Option 22774824 3481.63

Reliance Floating Rate Fund – Daily Dividend Reinvestment Plan 27334836 2752.54

Reliance Liquid Fund – Cash Plan – Daily Dividend Option 8299447 924.68

Reliance Medium Term Fund – Daily Dividend Plan 3077980 526.20

In fully paid units of Rs. 1000 /– each

DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 141966 1419.66

DSP BlackRock Cash Fund – Regular Plan – Weekly Dividend 24995 250.00

DSP BlackRock Cash Fund – Institutional Plan – Daily Dividend 64005 640.11

TATA Liquidity Management Fund – Daily Dividend 397790 3988.28

TATA Liquid Super High Investment Fund – Daily Dividend 112492 1253.74

TATA Treasury Manager SHIP Daily Dividend 192736 1933.14

39

SCHEDULE 7 : SUNDRY DEBTORS 31–12–08Rs. Lakhs


Secured(Considered good)

Over six months 9.02 59.99

Other debts 1349.06 968.57

1358.08 1028.56

Unsecured

Over six months (Including doubtful debts Rs. 280.89 Lakhs ; Previous year : Rs. 80.78 Lakhs; balance considered good) 396.73 461.89

Other debts (Considered good) 11736.49 12724.21

12133.22 13186.10

Less: Provision for doubtful debts 280.89 80.78

13210.41 14133.88

SCHEDULE 8 : CASH AND BANK BALANCES 31–12–08Rs. Lakhs


Cash on hand 6.63 4.66

Cheques on hand 82.05 346.58

With scheduled banks:

On current accounts 582.13 607.26

On fixed deposit accounts 171.50 361.75

753.63 969.01

842.31 1320.25


SCHEDULE 6 : INVENTORIES 31–12–08Rs. Lakhs


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

Stores and spare parts 241.35 330.64

Raw materials 3281.75 3022.94

Packing materials 98.56 101.63

Finished goods 5718.63 6625.64

Work–in–progress 1203.69 1190.19

10543.98 11271.04


SCHEDULE 10 : CURRENT LIABILITIES 31–12–08Rs. Lakhs


Sundry creditors:

Due to micro enterprises and small enterprises (See note 7, Schedule 17) 82.25 —

Due to others 11157.13 15765.57

11239.38 15765.57

Deposits 1443.85 1298.26

Unpaid dividends* 160.90 151.48

Unclaimed fixed deposits* 0.15 0.25

Unpaid interest on matured fixed deposits* 0.58 1.02

12844.86 17216.58

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

SCHEDULE 11 : PROVISIONS 31–12–08Rs. Lakhs


Employee Benefits:

Leave encashment 491.71 487.19

Gratuity 387.03 119.23

Ex–gratia gratuity 84.42 80.18

Others:

Provision for taxation (Net of advance payment of Income tax) 1177.43 1178.66


Corporate tax on proposed dividend 860.89 453.10

8067.02 4984.43

SCHEDULE 9 : LOANS AND ADVANCES 31–12–08Rs. Lakhs


(Unsecured – considered good, unless otherwise stated)

Advances and loans to the subsidiary (See note 25, Schedule 17) 709.47 687.49

Advances recoverable in cash or in kind or for value to be received 3672.17 3143.99

VAT set off admissible 52.51 177.41

Advance payment of Income tax (Net of Provision for taxation) 1648.55 2519.85

Balances with customs and excise on current account 315.26 594.87

6397.96 7123.61

41

Schedules forming part of the Profit and Loss Account

SCHEDULE 12 : OTHER INCOME 2008Rs. Lakhs

2007Rs. Lakhs

Dividend on current non–trade investments 171.56 184.22

Export incentives 482.72 353.86

Profit on sale of fixed assets (Net) 20.66 190.97

Cash discounts 36.15 25.68

Rental income 364.66 347.96

Indenting commission 634.52 468.16

Provision for doubtful debts written back (Net) — 0.10

Profit on sale of current investments (Net) 0.29 0.47

Miscellaneous 823.12 867.81

2533.68 2439.23

SCHEDULE 13 : COST OF MATERIALS 2008Rs. Lakhs

2007Rs. Lakhs

Raw materials consumed 41641.46 39521.95

Packing materials consumed 2204.63 2198.21

Purchases of finished goods 13410.45 13204.68

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

Opening stock



7815.83 8154.21

Less: Closing stock



6922.32 7815.83

893.51 338.38

58150.05 55263.22

SCHEDULE 14 : PERSONNEL COST 2008Rs. Lakhs

2007Rs. Lakhs

Salaries, wages, bonus, etc. 5256.71 5450.64

Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 1028.20 763.21

Welfare expenses 945.00 894.98

7229.91 7108.83


SCHEDULE 16 : OTHER EXPENDITURE 2008Rs. Lakhs

2007Rs. Lakhs

Stores and Spare parts etc. consumed 597.94 749.92

Repairs and maintenance:

Plant and machinery 886.37 895.98

Buildings 216.51 207.60

Others 176.59 173.22

Power and fuel 4464.92 4179.87

Rent (including lease payments) (See note 16, Schedule 17) 582.10 527.48

Rates and taxes (including water charges) 658.00 742.81

Insurance 109.83 183.61

Clearing, forwarding and transport 1490.65 1645.26

Travelling and conveyance 962.82 1059.13

Commission 250.64 191.57

Cash discount 22.37 83.32

Other discounts on sales 1324.79 2076.99


Provision for doubtful debts (Net) 200.11 —

Excise duty (376.11) 25.56

Exchange loss (Net) 172.63 22.94

Miscellaneous (See note 18, Schedule 17) 3712.10 3647.85

15842.89 16615.08

SCHEDULE 15 : INTEREST (NET) 2008Rs. Lakhs

2007Rs. Lakhs

Interest Paid

Others 153.38 359.33

153.38 359.33

Less: Interest Received (Gross):

(Tax deducted at source Rs. 7.71 Lakhs; Previous year : Rs.19.69 Lakhs)

On Investments – Long term Non trade — 75.73

Others 171.67 163.29

171.67 239.02

(18.29) 120.31

43

NotesSCHEDULE 17: Notes on the Balance Sheet and Profit and Loss Account for the year ended 31st December, 2008

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 issued by the Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956.

The significant accounting policies are as follows:

I. Sales

The Company recognises sale of goods on despatch to customers. Sales are net of excise duty, sales tax and trade discounts, wherever applicable.

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 Expenses’.

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,

(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.


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 will be 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.

45

2. Segment Information for the year ended 31st December, 2008 (As required by Accounting Standard (AS) – 17 Segment Reporting)

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

i) Intermediates and Colours : Consist of pigment dyestuffs and their dispersion, Intermediates for dyes, pesticides and pharmaceuticals

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

iii) Masterbatches : Covers commodity and speciality Masterbatches for Plastics and nylon fibers

(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 :

2008Rs. Lakhs

2007Rs. Lakhs

Inter– mediates

& Colours

Dyes and Specialty

Chemicals

Master–batches

Total Inter– mediates

& Colours

Dyes and Specialty

Chemicals

Master–batches

Total

Revenue

External Sales/ Revenue 36267.10 51470.40 3901.97 91639.47 32473.73 50791.39 2879.11 86144.23

Total Revenue ( Net ) 36267.10 51470.40 3901.97 91639.47 32473.73 50791.39 2879.11 86144.23

Results

Segment Results 4098.04 7026.57 606.38 11730.99 1109.80 7509.92 335.10 8954.82

Unallocated Corporate Expenses (net) (1144.24) (951.43)

Operating Profits 10586.75 8003.39

Interest Income / Dividend income 343.23 423.24

Interest Expenses (153.38) (359.33)

Profit Before Exceptional Items and Taxation

10776.60

8067.30

Exceptional Items (See note 23, Schedule 17) (48.00) (3133.45)

Profit Before Taxation After Exceptional Items

10728.60

4933.85

Current Tax / Deferred Tax (3613.71) (1646.41)

Fringe benefit Tax (118.50) (108.30)

Short provision for taxation for earlier years (248.09) —

Profit After Tax 6748.30 3179.14

Other Information

Segment Assets 18610.28 21564.60 2379.24 42554.12 20584.41 21957.13 1787.52 44329.06

Unallocated Corporate Assets 9036.84 7134.24

Total Assets 51590.96 51463.30

Segment Liabilities 4116.66 8026.18 469.17 12612.01 5610.69 9911.39 543.31 16065.39

Unallocated Corporate Liabilities 1505.08 2244.95

Total Liabilities 14117.09 18310.34

Notes


Information about Primary Business Segments : (Contd.)

2008Rs. Lakhs

2007Rs. Lakhs

Inter– mediates

& Colours

Dyes and Specialty

Chemicals

Master–batches


& Colours

Dyes and Specialty

Chemicals

Master–batches

Total

Capital Expenditure 646.68 1220.14 767.16 2633.98 1420.62 1941.61 359.58 3721.81

Unallocated Corporate Capital Expenditure 35.20 38.41

Total Capital Expenditure 2669.18 3760.22

Depreciation 1010.59 1032.82 121.84 2165.25 1264.99 772.83 86.58 2124.40

Impairment of Fixed Assets 728.62 — — 728.62 — — — —

Unallocated Corporate Depreciation 86.35 21.34

Total Depreciation/Amortisation/Impairment 2980.22 2145.74

Non Cash Expenses other than Depreciation/Amortisation

525.82

296.07

15.22

837.11

220.20

451.47

20.60

692.27

Unallocated Corporate Non Cash Expensesother than Depreciation/Amortisation

33.20

13.02

Total Non Cash Expenses other than Depreciation/Amortisation

870.31

705.29

Information about Secondary Segments :

2008 Rs. Lakhs

2007 Rs. Lakhs

Revenue by Geographical Market India Outside India

Total India Outside India

Total

External Sales 72991.30 18648.17 91639.47 68205.04 17939.19 86144.23

Segment Assets 39578.46 2975.66 42554.12 41123.46 3205.60 44329.06

Additions to Fixed Assets 2633.98 — 2633.98 3721.81 — 3721.81

Notes:

1 Total Assets exclude Advance Income Tax Rs.1648.55 Lakhs (Rs.2519.85 Lakhs)

2 Total Liabilities exclude the following :

(a) Proposed Dividend Rs. 5065.54 Lakhs (Rs.2666.07 Lakhs)

(b) Tax on Dividend Rs. 860.89 Lakhs (Rs. 453.10 Lakhs)

(c) Provision for Taxation Rs. 1177.43 Lakhs (Rs.1178.66 Lakhs)

(d) Deferred Tax Liability (Net) Rs. 254.94 Lakhs (Rs. 433.23 Lakhs)

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, Switzerland 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.

47

c) Other related parties in the Clariant group where common control exists:

Fellow Subsidiary Companies BTP Insurance Company Ltd. Clariant Life Science Molecules (Italia) SpA. BTP World S.A. Clariant Masterbatch Ibérica S.A. Clariant (Argentina) S.A. Clariant Masterbatches (Beijing) Ltd. Clariant (Australia) Pty. Ltd. Clariant Masterbatches (Deutschland) GmbH Clariant (Canada) Inc. Clariant Masterbatches (Finland ) Oy Clariant (China) Ltd. Clariant Masterbatches (France) Clariant (Colombia) S.A. Clariant Masterbatches (Guangzhou) Ltd. Clariant (Danmark) A/S Clariant Masterbatches (Italia) SpA. Clariant (Egypt) S.A.E. Clariant Masterbatches (Korea) Ltd. Clariant (Finland) Oy Clariant Masterbatches (Malaysia) Sdn. Bhd. Clariant (Guatemala) S.A. Clariant Masterbatches (Saudi Arabia) Ltd. Clariant (Gulf) FZE, Clariant Masterbatches (Shanghai) Ltd. Clariant (Honduras) S.A. de C.V. Clariant Masterbatches (Thailand) Ltd. Clariant (Japan) K.K. Clariant Masterbatches Benelux S.A. Clariant (Korea) Ltd. Clariant Masterbatches Huningue Clariant (Malaysia) Sdn. Bhd. Clariant Masterbatches Ireland Ltd. Clariant (Maroc) S.A. Clariant Masterbatches Norden AB Clariant (Mexico) S.A. de C.V. Clariant Masterbatches UK Ltd. Clariant (New Zealand), Ltd. Clariant Oil Services Scandinavia AS Clariant (Oesterreich) GmbH Clariant Oil Services UK Ltd. Clariant (Pakistan) Ltd. Clariant Participations (The Netherlands) B.V. Clariant (Perú) S.A. Clariant Pigments (Korea) Ltd. Clariant (Singapore) Pte. Ltd. Clariant Pigments (Tianjin) Ltd. Clariant (Sverige) AB Clariant Prodotti (Italia) S.p.A. Clariant (Sverige) Holding AB Clariant Production (France) Clariant (Thailand) Ltd. Clariant Production UK Ltd. Clariant (Tianjin) Ltd. Clariant Productos Químicos S.A. de C.V. Clariant (Uruguay) S.A. Clariant Produkte (Deutschland) GmbH Clariant (Venezuela) S.A. Clariant Produkte (Schweiz) AG Clariant Administração de Bens Ltd. Clariant Reinsurance Ltd., Clariant Advanced Materials GmbH Clariant S.A. Clariant Business Services GmbH Clariant Service (Schweiz) AG Clariant Chemicals (China) Ltd. Clariant Services (Benelux) S.A. / N.V. Clariant Chemicals (Guangzhou) Ltd. Clariant Services (France) Clariant Chemicals (Huizhou) Ltd. Clariant Services UK Ltd. Clariant Chemicals (Taiwan) Co., Ltd. Clariant Servizi (Italia) S.p.A. Clariant Chemicals Trading (Shanghai) Ltd. Clariant Southern Africa (Pty) Ltd., Clariant Chemiebeteiligungen AG Clariant Specialty Chemicals (Zhenjiang) Co. Ltd Clariant Colorquímica (Chile) Ltda. Clariant Specialty Fine Chemicals (France) Clariant Consulting AG Clariant Trading (China) Ltd. Clariant Corporation Clariant Trading (Guatemala) S.A. Clariant Distributie (Nederland) BV Clariant Türkiye A.S. Clariant Distribution (Belgium) S.A. / N.V. Clariant Vertrieb (Deutschland) GmbH & Co. KG Clariant Distribution (France) Clariant Verwaltungs GmbH Clariant Distribution UK Ltd. Dick Peters B.V. Clariant Distribuzione (Italia) S.p.A. Egyptian German Company for Dyes & Resins S.A.E. Clariant Export AG K.J. Quinn Clariant Finance (BVI) Ltd. Lancaster Synthesis Inc. Clariant Finance (Luxembourg) S.A. PCA Hodgson Chemicals Pty. Ltd. Clariant Finance (USA) LLC PT Clariant Indonesia Clariant Finanz AG Ricon Colors Inc. Clariant Horsforth Ltd. Rite Systems East Inc. Clariant Ibérica Comercial S.L. Rite Systems Inc. Clariant Ibérica Producción S.A. Technische Services Gersthofen GmbH Clariant Ibérica Servicios S.L. UK dormant Clariant – Companies Clariant Insurance AG, Liechtenstein US dormant BTP – Companies Clariant Life Science Molecules (Florida) Inc.

d) Key Management Personnel:

H. Meier : Vice-Chairman & Managing Director

Notes


During the year following transactions were entered into with related parties :

(i) Holding Company, Subsidiary Company and Fellow Subsidiaries

2008 Rs. Lakhs

2007 Rs. Lakhs

Holding Company :

Transactions during the year :

Sales of goods

Clariant International AG 1742.65 1207.76

Services rendered and others


Purchase of goods


Services received and others


Expenses recovered


Dividend paid


EBITO Chemiebeteiligungen AG 816.71 1470.07

Clariant Participations AG 266.00 478.80

Balances outstanding as at the year end

Amount payable 984.03 1153.41

Amount receivable 676.53 191.13

Subsidiary Company :


Chemtreat Composites India Pvt. Ltd.

Sale of Goods 0.41 —

Sale of Goods (Capital) 16.87 —

Services rendered and others 115.00 95.76

Purchase of Goods 0.20 —

Loan given during the year 75.00 120.00

Loan repaid during the year — 300.00



Fellow Subsidiaries :


Sales of goods

Clariant Produkte (Deutschland) GmbH 2338.86 3519.71

Clariant Corporation 2158.91 1998.33

Clariant (China) Ltd 1524.41 1992.57

Clariant UK Ltd — 219.92

Others 4756.53 4694.36



Clariant Export AG 283.67 240.23

Clariant Specialty Fine Chemicals — 44.51

Others 44.70 28.14

49

2008 Rs. Lakhs

2007 Rs. Lakhs

Purchase of goods


Clariant (Tianjin) Ltd. 170.67 0.42


Others 211.87 185.48

Purchase of capital goods

Clariant MasterBatch GmbH 170.08 225.31

Clariant Masterbatches (Italia) SpA. 23.34 —

Clariant Produkte (Deutschland) GmbH — 41.15


PT Clariant Indonesia 8.19 9.06

Clariant (Singapore) Pte. Ltd 29.65 24.32


Clariant SA Brazil 10.51 17.26

Clariant Southern Africa (Pty) Ltd 8.86 2.24

Others 20.60 20.36

Expenses recovered

Clariant Produkte (Deutschland) GmbH 4.49 —

Others 0.78 —




(ii) Key Management Personnel :

Remuneration 164.97 152.50

Commission payable 26.75 21.00

31–12–2008 Rs. Lakhs

31–12–2007Rs. Lakhs

I (a) in respect of income tax mattersdecided against the Company, in respect of which the Company is in further appeal 856.16 1151.56

decided in favour of the Company against which the department is in appeal. 14.78 14.78

(b) in respect of sales tax matters 494.22 1230.38

(c) in respect of excise matters 455.66 502.86

(d) in respect of bills of exchange discounted with banks [ since realised Rs. 17.73 Lakhs ( Rs.1308.00 Lakhs ) ]

29.60 1752.68

(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.121 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.

During the year following transactions were entered into with related parties : (Contd.)

(i) Holding Company, Subsidiary Company and Fellow Subsidiaries (Contd.)

Notes

4. Contingent liabilities not provided for :

31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

5. Estimated amount of contracts remaining to be executed on capital account and not provided for 148.31 156.61


31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

Deferred Tax Assets

a) Provision for doubtful debts 95.50 27.46

b) Provision for retirement benefits 327.47 192.91

c) Expenses allowable for tax purposes when paid 53.54 53.54

d) Integration expenses 78.70 141.66

e) Payment/Provision for Voluntary retirement scheme 552.46 832.09

f) Others 1.23 1.23

1108.90 1248.89

Deferred Tax Liabilities

Depreciation / Amortisation / Impairment (1363.84) (1682.12)

Deferred Tax Assets/(Liabilities) – Net (254.94) (433.23)

31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

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

(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 enterprise 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.

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:

31–12–2008 31–12–2007

Amount in foreign currency

Amount Rs. Lakhs


Amount Rs. Lakhs

(a) Forward Exchange Contracts outstanding as at

Currency

USD / INR 500000 251.03 — —

EUR / INR — — 150000 87.23

251.03 87.23

(b) Foreign Currency Exposures not covered by a Derivative Instrument

(i) Amount receivable on account of export of goods and services:

Currency

USD 5153335 2492.70 7524231 2974.72

EUR 124555 85.12 350919 204.60

CHF 320046 146.81 78623 26.28

2724.63 3205.60

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

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

51

8. Disclosure in respect of Derivative Instruments :

31–12–2008 31–12–2007


Amount Rs. Lakhs


Amount Rs. Lakhs

(ii) Amount payable on account of import of goods and services:

Currency

USD 2366286 1144.07 3692348 1504.57

EUR 1618387 1106.89 1782150 1031.47

CHF 337817 154.96 407456 142.18

GBP 14742 10.38 59108 46.64

2416.30 2724.86

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

2008

Rs. Lakhs

2007

Rs. Lakhs

Directors’ Sitting Fees 0.90 1.40

Salaries 136.17 131.40

Commission 34.75 29.00*

Provident Fund 1.89 —

Other Perquisites and Benefits in Cash or in Kind 0.16 0.10

173.87 161.90

* Actual paid during the year Rs. 19.58 Lakhs and Rs. 9.42 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

2008

Rs. Lakhs

2007

Rs. Lakhs

Profit after tax as per Profit and Loss Account 6748.30 3179.14

Add : Provision for taxation–Net 3980.30 1754.71

Managerial remuneration 173.87 161.90

Wealth tax 5.00 5.00

Voluntary Retirement scheme compensation 48.00 2437.76


Provision for doubtful debts ( net ) 200.11 —

5135.90 4359.37

11884.20 7538.51

Less : Profit on sale of investments 0.29 0.47

Provision for doubtful debts written back (net) — 0.10

Capital Profit on sale of Fixed assets 9.93 195.70

10.22 196.27

Net profit as per Section 198 11873.98 7342.24

Commission:

To Vice–Chairman & Managing Director restricted to sum as determined by the Board of Directors. 26.75 21.00*

To Directors who are not in whole–time employment of the Company @ 1% of net profit i.e. Rs.118.74 Lakhs

(Rs.73.42 Lakhs) restricted to sum as determined by the Board of Directors.

8.00

8.00

34.75 29.00

* Actual paid during the year Rs. 11.58 Lakhs

(contd.)

Notes


12. Sales, Opening and Closing Stock

2008 2007

Class of Goods Unit Annual Installed Capacity

Production * Annual Installed Capacity

Production *

(a) Intermediates and Colours M. Tonnes 27810** 19348** 27810** 16114**

(b) Dyes and Specialty Chemicals M. Tonnes 63070** 42979** 54040** 49262**

(c) Masterbatches M. Tonnes 1645 1586 1520 1314

*

**

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.

2008 2007

Class of Goods Unit Quantity Value Rs. Lakhs

Quantity Value Rs. Lakhs

Trading Items

Dyes, Chemicals, pigments, masterbatches, etc. M. Tonnes 6731 13410.45 8285 13204.68

Class of Goods Unit Opening Stock Closing Stock Sales (Inclusive of

excise duty)




(a) Intermediates and Colours M. Tonnes 715 2300.53 730 2713.13 19333 39265.18

(860) (2940.09) (715) (2300.53) (16259) (34832.05)

(b) Dyes and Specialty Chemicals M. Tonnes 2903 2327.94 1617 1458.51 44265 40773.80

(2372) (1823.22) (2903) (2327.94) (48731) (41381.60)

(c) Masterbatches M. Tonnes 55 82.42 47 61.27 1594 4213.26

(16) (30.94) (55) (82.42) (1275) (3078.10)

(d) Trading items (including dyes, chemicals, pigments, masterbatches, etc.)

M. Tonnes 1171 1914.75 828 1485.72 7074 15893.10

(1176) (2057.58) (1171) (1914.75) (8290) (15879.84)

6625.64 5718.63 100145.34

(6851.83) (6625.64) (95171.59)

10. Capacities and Production

11. Purchase of Finished Goods

53

2008 2007

Unit Quantity Value Rs. Lakhs


(a) Acetic Acid Glacial M. Tonnes 9831 3139.24 9106 3010.35

(b) Others (None of the items individually exceed 10 % of

the total value of raw materials consumed)

38502.22 36511.60

41641.46 39521.95

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

13. Raw Materials consumed

2008

Rs. Lakhs

2007

Rs. Lakhs

15. Earnings Per Share

(a) Net profit after taxation ( Rupees in Lakhs) 6748.30 3179.14

(b) Number of equity shares outstanding 26660745 26660745

(c) Basic and Diluted earnings per share (In Rupees) 25.31 11.92

(d) Face value per share (In Rupees) 10.00 10.00

2008 2007

Percentage of total

Consumption

Value Rs. Lakhs

Percentage of total

Consumption

Value Rs. Lakhs

(i) Raw Materials :

Imported 32.10 13365.31 26.89 10627.43

Indigenous 67.90 28276.15 73.11 28894.52

100.00 41641.46 100.00 39521.95

(ii) Components and spare parts referred to in Paragraph 4D (c ) of Schedule VI of the Companies Act, 1956 are assumed to be those incorporated in the goods produced and not

those used for maintenance of plant and machinery.

16. In respect of all assets taken on lease on or after 1st April, 2001

(a) In respect of Operating leases, where lease agreements have been formally entered into, minimum lease payments recognised in the Profit and loss account for the year are as follows : Residential flats, office premises, vehicles, equipment and machinery, computers etc.

377.91

326.70

(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 326.65 322.42

For a period later than one year and not later than five years 343.68 405.78

Total 670.33 728.20

14. Consumption of Raw Materials

Notes


2008

Rs. Lakhs

2007

Rs. Lakhs

17. Expenditure on Research and development

(a) Capital expenditure 9.93 4.58

(b) Revenue expenditure charged to profit and loss account 323.29 338.70

333.22 343.28

18. Miscellaneous Expenses in Schedule 16 : Other expenditure include Auditors’ remuneration and expenses :

(Excluding Service tax)

(i) Audit fees 22.00 20.00

(ii) Company law matters — 0.50

(iii) Taxation services — 0.74

(iv) Other services 32.25 40.50

(v) Out of pocket expenses 0.11 1.75

54.36 63.49

19. Value of imports (C.I.F.)

(i) Raw materials and trading items 19144.01 15359.60

(ii) Components and spare parts 11.28 26.16

(iii) Capital goods 394.19 348.96

20. Expenditure in Foreign Currency (subject to deduction of tax where applicable)

(i) Commission 142.98 88.93

(ii) Interest 57.22 261.49

(iii) Others (includes exchange loss) 1483.83 1194.77

21. Remittance in foreign currency on account of dividend

Number of non–resident shareholders where direct remittances have been made by the Company 3 3

Number of shares on which dividend is remitted 16902080 16902080

Year to which dividend relates 2007 2006*

Amount remitted (Rs. Lakhs) 1690.21 3042.37

*The dividend for the year 2006 pertains to the period April 2006– December 2006.

22. Earnings in Foreign Exchange

(i) Exports (F.O.B.) 18185.95 17378.32

(ii) Know–how 155.09 84.53

(iii) Others (insurance, freight, commission, claims, exchange gain etc.) 1392.98 1202.86

23. Exceptional items in Profit & Loss Account include

(i) Termination benefits to Employees / Contractors 48.00 2671.80

(ii) Write off of assets (Net of recovery of Rs. 141.00 Lakhs) due to restructuring — 461.65

48.00 3133.45

55Notes

24. Employee Benefits

(a) Defined benefit Plans – As per Actuarial valuation as on December 31, 2008

Gratuity 2008

Rs. Lakhs

2007

Rs. Lakhs

Funded Unfunded Funded Unfunded

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

1. Current service cost 190.63 4.36 200.66 3.44

2. Interest cost 142.81 6.01 169.14 5.06

3. Expected return on plan assets (194.58) — (216.83) —

4. Net acturial (gain)/loss recognised during the year 234.40 (5.81) 41.07 (15.03)

5. Expense /(Income) recognised in Profit & Loss account 373.26 4.56 194.04 (6.53)

[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 year

1. Expected return on plan assets 194.58 — 216.83 —

2. Actuarial gain/(loss) on plan assets 39.51 — (57.99) —

3. Actual return on plan assets 234.09 — 158.84 —

(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end

1. Present value of the Defined Benefit obligation 2940.12 84.42 2551.45 80.18

2. Fair value of plan assets 2553.09 — 2432.22 —

3. Net Asset/(Liability) recognised in the Balance Sheet (387.03) (84.42) (119.23) (80.18)

(iv) Change in Defined Benefit obligation during the year

1. Present value of obligation as at the beginning of the year 2551.45 80.18 2945.82 90.03


3. Interest cost 142.81 6.01 169.14 5.06

4. Benefits paid (218.68) (0.32) (747.25) (3.32)

5. Actuarial (gain)/loss on obligation 273.91 (5.81) (16.92) (15.03)

6. Present value of obligation as at the end of the year 2940.12 84.42 2551.45 80.18

(v) Changes in Fair value of plan asset during the year

1. Fair value of plan assets as at the beginning of the year 2432.22 — 2710.36 —


3. Contributions made 105.46 — 310.27 —

4. Benefits paid (218.68) — (747.25) —

5 . Actuarial gain/(loss) on plan assets 39.51 — (57.99) —

6 . Fair value of plan assets as at the end of the year 2553.09 — 2432.22 —

(vi) Major categories of plan assets as a percentage of total plan assets

1. Central Government securities 24.84% — 25.05% —

2. State Government securities 10.03% — 9.89% —

3. Private Sector bonds 15.21% — 13.64% —

4. Special deposit scheme 21.69% — 22.77% —

5. Cash at Bank 1.10% — 1.95% —

6. Investment in Insurance companies 22.67% — 22.30% —

7. Others 4.46% — 4.40% —

(vii) Actuarial assumptions

1. Discount rate 7.0% 7.0% 8.0% 8.0%

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%


31–12–08 Rs. Lakhs

31–12–07 Rs. Lakhs

Other Long Term Benefits

The Defined Benefit Obligations which are provided for but not funded are as under:

Compensated Absence/Leave Salary 491.71 487.19

( 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 thebeginning of the year, for returns over the entire life of the related obligation.

( e ) 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 93.02 170.35

Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc, includes –

Provident Fund and Family Pension 278.81 316.73

Superannuation Fund 370.57 256.86

Gratuity Fund 377.82 187.51

Other funds 1.00 2.11

25. Advances and loans to subsidiary is due from Chemtreat Composites India Private Ltd Rs. 709.47 Lakhs (Rs. 687.49 Lakhs). Maximum amount due during the year Rs. 786.22 Lakhs

(Rs. 770.57 Lakhs). This amount is interest free and repayable on demand.

26. During the year, the Company has changed the rate of depreciation for Airconditioner from 4.75% to 20.00% and for Motor Cars from 20.00% to 25.00% . As a result of the change in

rate of depreciation, the depreciation charge for the year is higher and profit before tax for the year is lower, each by Rs. 176.59 Lakhs.


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




57

I. Registration Details

Registration No. State Code

Balance Sheet Date

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

Public Issue Right Issue

Bonus Issue Private Placement

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

Total Liabilities* Total Assets

Sources of Funds

Paid–up–Capital Reserves and Surplus

Secured Loans Unsecured Loans

Application of Funds

Net Fixed Assets Investments

Net Current Assets** Miscellaneous Expenditure

Accumulated Losses

*Including Shareholders’ funds **Includes Deferred tax liabilities (net) Rs. 25494

IV. Performance of Company (Amount in Rs. Thousands)

Turnover (Gross Revenue) @ Total Expenditure

@ includes Other Income Rs. 253368

Earnings Per Share in Rs.** Dividend Rate %

**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

Item Code No.

Product Description

Item Code No.

Product Description

1 1 – 1 0 8 0 6

3 1 – 1 2 – 2 0 0 8

N I L

N I L

N I L

√+ –

√+ –

Statement Pursuant To Part IV of Schedule VI To The Companies Act, 1956Balance Sheet Abstract and Company’s General Business Profile

5 3 2 3 9 5 1 5 3 2 3 9 5 1

2 6 6 6 0 7

6 7 4 8 3 0

9 4 1 7 3 1 5 8 3 4 4 4 5 5

N I L9 8 2 7 8 4

N I L

Profit Before Tax Profit After Tax

Date Month Year

3 2 0 4 1 7 . 5 1

N I L

2 9 0 9 7 5 5

N I L 3 0 9 0 7

1 6 4 6 0 3 8 5 7 8 4 4 7

1 0 7 2 8 6 0

1 9 0

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

2 9 2 4 1 0 . 1 9

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 %

2 9 1 5 9 0 . 0 0

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




1 1

2 5 . 3 1


Name of the Subsidiary Company Chemtreat Composites India Private Ltd.

1. Financial year of the Subsidiary Company January 2008 – December 2008

2. 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) Ltd at the end of the financial year 100%

4. Net aggregate amount of profits/ (loss) of Subsidiary Company not dealt with in the accounts of Clariant Chemicals (India) Limited

(a) for the current financial year Rs. (38.07) Lakhs

(b) for the previous financial years Rs. 48.99 Lakhs

Statement Pursuant to Section 212of the Companies Act, 1956


R. A. Shah Chairman H. Meier Vice-Chairman & Managing Director B. S. Mehta Director Diwan A. Nanda Director B. L. Gaggar Director Finance & Company Secretary


59

Auditors’ Report to the Members

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, 2008 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.

Auditors’ Report to the Board of Directors of Clariant Chemicals (India) Limited on the Consolidated Financial Statements of Clariant Chemicals (India) Limited

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, 2008;

(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.

For A. F. Ferguson & Co.

Chartered Accountants

A. C. Khanna

Partner

Membership No. 17814

Mumbai: 20th February, 2009


Schedule

31–12–08 Rs. Lakhs

31–12–07 Rs. Lakhs

SOURCES OF FUNDSShareholders’ funds Share capital 1 2666.07 2666.07

Reserves and surplus 2 29097.60 28324.67

31763.67 30990.74

Loan funds Unsecured loans 3 309.07 407.16

309.07 407.16

Deferred tax liability – Net (See note 6, Schedule 17) 254.94 496.68

32327.68 31894.58

APPLICATION OF FUNDSFixed assets 4

Gross block 39816.46 37403.21

Less : Accumulated depreciation and impairment 23538.07 21085.88

Net block 16278.39 16317.33

Capital work–in–progress and advances, etc. 1072.54 1784.14

17350.93 18101.47

Investments 5 5459.47 2618.27

Current assets, loans and advances Inventories 6 10631.55 11456.63

Sundry debtors 7 13219.68 14156.95

Cash and bank balances 8 921.95 1330.32

Loans and advances 9 5695.75 6477.19

30468.93 33421.09

Less: Current liabilities and provisions Liabilities 10 12884.63 17261.82

Provisions 11 8067.02 4984.43

20951.65 22246.25

Net current assets 9517.28 11174.84

32327.68 31894.58

Notes on balance sheet and profit and loss account 17

Consolidated Balance Sheet as at 31st December, 2008




Per our report attached




61

Consolidated Profit and Loss Accountfor the year ended 31st December, 2008

Schedule

2008Rs. Lakhs

2007Rs. Lakhs

INCOME Sales – Gross 100529.74 95279.70 Less: Excise duty 8505.81 9027.36 Sales – Net 92023.93 86252.34 Other income 12 2528.89 2442.04

94552.82 88694.38EXPENDITURE Cost of materials 13 58265.63 55259.99 Personnel cost 14 7229.91 7108.83 Interest (Net) 15 (18.29) 120.14 Depreciation/Amortisation 4 2319.55 2214.19 Impairment of fixed assets 4 728.62 — Other expenditure 16 16036.42 16772.17

84561.84 81475.32Less: Service charges recovered 673.23 641.26

83888.61 80834.06PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 10664.21 7860.32Exceptional items (See note 12, Schedule 17) 48.00 3133.45PROFIT AFTER EXCEPTIONAL ITEMS AND BEFORE TAXATION 10616.21 4726.87Provision for taxationCurrent tax 3792.00 2195.00Deferred tax (241.74) (528.14)Fringe benefit tax 118.50 108.67(Excess)/Short provision for taxation in respect of earlier years 248.09 — PROFIT AFTER TAXATION 6699.36 2951.34Balance brought forward from previous year 999.35 1627.62Available for appropriation 7698.71 4578.96APPROPRIATED AS FOLLOWS General reserve 674.83 317.91 Proposed dividend 5065.54 2666.07 Corporate tax on proposed dividend 860.89 453.10 Corporate tax on dividend of Previous period — 142.53 Balance carried to the balance sheet 1097.45 999.35

7698.71 4578.96Notes on balance sheet and profit and loss account 17

Basic and Diluted earnings per share (in Rupees) (See note 8, Schedule 17) 25.13 11.07

Face value per share (in Rupees) 10.00 10.00









Consolidated Cash Flow Statementfor the year ended 31st December, 2008

2008 Rs. Lakhs

2007 Rs. Lakhs

A. CASH FLOW FROM OPERATING ACTIVITIES :

Net Profit after exceptional items and before taxation 10616.21 4726.87

Adjustments for :

Depreciation / Amortisation 2319.55 2214.19


Unrealised foreign exchange (gain) / loss (Net) 60.21 18.05

Interest income (171.67) (239.19)

Dividend income (171.56) (184.22)

Loss / (profit) on sale of assets (Net) (9.58) (190.97)

Loss / (profit) on sale of investments (Net) (0.29) (0.47)

Amortisation / Charge of voluntary retirement scheme compensation — 177.25

Provision for doubtful debts (Net) 200.11 (0.10)

Provision for leave encashment 4.52 (165.63)

Provision for ex–gratia gratuity 4.24 (9.85)

Provision for gratuity 267.80 (160.65)

Interest expenses 153.38 359.33


Operating profit before working capital changes 14394.51 7208.23

Adjustments for :

Trade and other receivables (2650.44) 255.81

Inventories 825.08 1477.97

Trade, other payables and provisions (4453.14) (1524.01)

Cash generated from operations 8116.01 7418.00

Direct taxes paid– (Net of refunds) 9.33 (2819.10)

Net cash from operating activities 8125.34 4598.90

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of fixed assets (2719.66) (3877.15)

Sale of fixed assets 38.64 468.41

Purchase of investments (42571.83) (38078.77)

Sale of investments 39730.92 39786.55

Interest received 171.67 390.47

Dividend received 171.56 184.22

Net Cash from / (used in) investing activities (5178.70) (1126.27)

63

Notes :

1. The Cash flow has been prepared under the “Indirect Method” as set out in Accounting Standard–3 on Cash flow statement issued by the Institute of Chartered Accountants of India.

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


2008 Rs. Lakhs

2007 Rs. Lakhs

C. CASH FLOW FROM FINANCING ACTIVITIES :

Cash credit and packing credit (Net) — (142.44)

Repayment of borrowings (98.09) (71.80)

Interest paid (147.17) (307.51)

Dividend / dividend tax paid (3109.75) (5585.66)

Net Cash used in financing activities (3355.01) (6107.41)

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) (408.37) (2634.78)

CASH AND CASH EQUIVALENTS AS AT BEGINNING OF THE YEAR 1330.32 3965.10

CASH AND CASH EQUIVALENTS AS AT THE END OF THE YEAR (Refer Schedule 8 ) 921.95 1330.32

Consolidated Cash Flow Statement









SCHEDULE 3 : UNSECURED LOANS 31–12–08Rs. Lakhs


From others:

Interest–free sales tax deferral scheme granted by State Industries Promotion Corporation of Tamil Nadu Limited (Repayable within one year Rs. 104.29 lakhs, Previous Year: Rs. 98.09 lakhs) 309.07 407.16

309.07 407.16

SCHEDULE 2 : RESERVES AND SURPLUS 31–12–08Rs. Lakhs


Capital reserveAs per last Balance sheet

730.11

730.11

Capital redemption reserveAs per last Balance sheet

137.50

137.50

Securities premium accountAs per last Balance sheet

3545.65

3545.65

Investment allowance reserveAs per last Balance sheet

20.00

20.00

General reserveAs per last Balance sheet

22892.06

22574.15

Add : Transfer from Profit and loss account 674.83 317.91

23566.89 22892.06

Profit and loss account 1097.45 999.35

29097.60 28324.67

Schedulesforming part of the Consolidated Balance Sheet

SCHEDULE 1 : SHARE CAPITAL 31–12–08Rs. 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.

65

SCHEDULE 5 : INVESTMENTS (AT COST) 31–12–08Rs. Lakhs


Current



7754587 (Previous year : 8094818) HDFC Liquid Fund Premium Plan –Dividend–Daily Reinvest 950.70 992.41

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

5571131 (Previous year : NIL) Reliance Medium Term Fund – Daily Dividend Plan 952.41 —

7999333 (Previous year : NIL) Fidelity Cash Fund (Institutional) – Daily Dividend 800.13 —

NIL (Previous year : 5521028) Kotak Liquid (Institutional Premium) – Daily Dividend — 675.11

NIL (Previous year : 9488974) Birla Cash Plus –Instl. Prem.–Daily Dividend–Reinvestment — 950.75


89206 (Previous year : NIL) DSP BlackRock Floating Rate Fund – Institutional Plan – Daily Dividend 892.06 —

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

Total Current 5459.47 2618.27

Total Investments – Unquoted 5459.47 2618.27

SCHEDULE 4 : FIXED ASSETS Rs. Lakhs

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 . Adjustments are mainly on account of reclassification of certain assets.

3. In accordance with the provisions of the Accounting Standard 28 on Impairment of Assets issued by the Institute of Chartered Accountants of India, the Company has identified certain fixed assets in respect of the Intermediates and colours segment that were impaired during the year mainly on account of economic performance and viability of such assets which does not have any value in use. Accordingly an impairment loss of Rs. 728.62 lakhs has been recognised in the profit and loss account for the year.

GROSS BLOCK DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCK

As at 31–12–07

Additions/ Adjustments (See note 2)


As at 31–12–08

As at 31–12–07


For the year (See note 14, Schedule 17)

Impairment (See note 3)

As at 31–12–08

As at 31–12–08

As at 31–12–07

Intangible Assets

Goodwill on consolidation 225.44 — — 225.44 — — — — — 225.44 225.44

Tangible Assets

Land freehold 153.86 — — 153.86 — — — — — 153.86 153.86

Land leasehold 14.88 — — 14.88 4.35 — 0.15 — 4.50 10.38 10.53

Buildings 6220.30 681.78 9.40 6892.68 2069.54 2.94 170.77 80.09 2317.46 4575.22 4150.76

Plant, machinery, equipment etc. 27643.58 2626.05 715.17 29554.46 16957.28 323.21 1737.84 648.53 19020.44 10534.02 10686.30

Furniture, fixtures and office appliances 2335.67 94.80 152.24 2278.23 1508.32 133.44 254.14 — 1629.02 649.21 827.35

Vehicles 809.48 28.63 141.20 696.91 546.39 136.39 156.65 — 566.65 130.26 263.09

Total 37403.21 3431.26 1018.01 39816.46 21085.88 595.98 2319.55 728.62 23538.07 16278.39

Previous year 38443.91 2840.90 3881.60 37403.21 21811.24 2939.55 2214.19 — 21085.88 16317.33

Capital work–in–progress 1049.08 1757.18

Advances against capital orders 23.46 26.96

1072.54 1784.14

17350.93 18101.47

Schedules


SCHEDULE 6 : INVENTORIES 31–12–08Rs. Lakhs


At lower of Cost and net Realisable Value (as certified by the Management)

Stores and spare parts 248.50 338.64

Raw materials 3340.38 3108.19

Packing materials 98.96 102.11



10631.55 11456.63

SCHEDULE 8 : CASH AND BANK BALANCES 31–12–08Rs. Lakhs


Cash on hand 6.66 4.72

Cheques on hand 82.05 346.58

With scheduled banks:

On current accounts 661.74 617.27

On fixed deposit accounts 171.50 361.75

833.24 979.02

921.95 1330.32

SCHEDULE 7 : SUNDRY DEBTORS 31–12–08Rs. Lakhs


Secured(Considered good)

Over six months 9.02 59.99

Other debts 1349.06 968.57

1358.08 1028.56

Unsecured

Over six months (Including doubtful debts Rs.280.89 Lakhs ; Previous year : Rs. 80.78 Lakhs; balance considered good)

396.73

461.89

Other debts (Considered good) 11745.76 12747.28

12142.49 13209.17

Less: Provision for doubtful debts 280.89 80.78

13219.68 14156.95

67

SCHEDULE 9 : LOANS AND ADVANCES 31–12–08Rs. Lakhs


(Unsecured – considered good, unless otherwise stated)

Advances recoverable in cash or in kind or for value to be received 3676.80 3150.43

VAT set off admissible 52.51 201.94

Advance payment of Income tax (Net of Provision for taxation) 1648.99 2520.16

Balances with customs and excise on current account 317.45 604.66

5695.75 6477.19

SCHEDULE 10 : CURRENT LIABILITIES 31–12–08Rs. Lakhs


Sundry creditors

Due to micro enterprises and small enterprises 82.25 —

Due to others 11196.90 15810.81

11279.15 15810.81

Deposits 1443.85 1298.26

Unpaid dividends* 160.90 151.48

Unclaimed fixed deposits* 0.15 0.25

Unpaid interest on matured fixed deposits* 0.58 1.02

12884.63 17261.82

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

SCHEDULE 11 : PROVISIONS 31–12–08Rs. Lakhs


Employee Benefits:

Leave encashment 491.71 487.19

Gratuity 387.03 119.23

Ex–gratia gratuity 84.42 80.18

Others:

Provision for taxation (Net of advance payment of Income tax) 1177.43 1178.66


Corporate tax on proposed dividend 860.89 453.10

8067.02 4984.43

Schedules


Schedulesforming part of the Consolidated Profit and Loss Account

SCHEDULE 12 : OTHER INCOME 2008Rs. Lakhs

2007Rs. Lakhs

Dividend on current non–trade investments 171.56 184.22

Export incentives 482.72 353.86

Profit on sale of fixed assets (Net) 9.58 190.97

Cash discounts 36.15 25.68

Rental income 364.66 347.96

Indenting commission 634.52 468.16

Provision for doubtful debts written back (Net) — 0.10

Profit on sale of current investments (Net) 0.29 0.47

Miscellaneous 829.41 870.62

2528.89 2442.04

SCHEDULE 13 : COST OF MATERIALS 2008Rs. Lakhs

2007Rs. Lakhs

Raw materials consumed 41684.12 39563.19

Packing materials consumed 2207.08 2200.14

Purchases of finished goods 13410.45 13204.68

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

Opening stock



7907.69 8199.67

Less: Closing stock



6943.71 7907.69

963.98 291.98

58265.63 55259.99

SCHEDULE 14 : PERSONNEL COST 2008Rs. Lakhs

2007Rs. Lakhs

Salaries, wages, bonus, etc. 5256.71 5450.64

Contribution/Provision for provident fund, superannuation scheme, gratuity fund, etc. 1028.20 763.21

Welfare expenses 945.00 894.98

7229.91 7108.83

69

SCHEDULE 16 : OTHER EXPENDITURE 2008Rs. Lakhs

2007Rs. Lakhs

Stores and Spare parts etc. consumed 612.15 759.48

Repairs and maintenance:

Plant and machinery 896.24 918.64

Buildings 216.51 217.63

Others 187.41 173.22

Power and fuel 4479.83 4203.91

Rent (including lease payments) (See note 9, Schedule 17) 582.10 527.48

Rates and taxes (including water charges) 659.06 744.17

Insurance 109.28 190.85

Clearing, forwarding and transport 1533.80 1662.85

Travelling and conveyance 965.30 1061.61

Commission 250.64 191.57

Cash discount 22.37 83.32

Other discounts on sales 1324.79 2076.99


Provision for doubtful debts (Net) 200.11 —

Excise duty (374.50) 28.31

Exchange loss (Net) 158.29 24.79

Miscellaneous (See note 11, Schedule 17) 3820.07 3705.38

16036.42 16772.17

SCHEDULE 15 : INTEREST (NET) 2008Rs. Lakhs

2007Rs. Lakhs

Interest Paid

Others 153.38 359.33

153.38 359.33

Less: Interest Received (Gross) :

(Tax deducted at source Rs. 7.71 Lakhs; Previous year : Rs.19.73 Lakhs)

On Investments – Long term Non trade — 75.73

Others 171.67 163.46

171.67 239.19

(18.29) 120.14

Schedules


Notes to the Consolidated Financial StatementsSCHEDULE 17: Notes on the Consolidated Balance Sheet and Profit and Loss Account for the year ended 31st December, 2008

1. Significant Accounting Policies

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.

The financial statements are prepared at historical cost on the accrual basis of accounting and in accordance with the standards on accounting issued by the Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956.

The significant accounting policies are as follows:

I. Sales

The Company recognises sale of goods on despatch to customers. Sales are net of excise duty, sales tax and trade discounts, wherever applicable.

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 Expenses’.

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 except Goodwill on consolidation are being amortised equally over a period of three years.

71Notes to the Consolidated Financial Statements

(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.

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 will be 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, 2008 (As required by Accounting Standard (AS) – 17 Segment Reporting)

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

i) Intermediates and Colours : Consist of pigment dyestuffs and their dispersion, Intermediates for dyes,pesticides and pharmaceuticals

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

iii) Masterbatches : Covers commodity and speciality Masterbatches for Plastics and nylon fibers

(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:

2008Rs. Lakhs

2007Rs. Lakhs

Inter– mediates

& Colours

Dyes and Specialty

Chemicals

Master–batches


& Colours

Dyes and Specialty

Chemicals

Master–batches

Total

Revenue

External Sales/ Revenue 36267.10 51854.86 3901.97 92023.93 32473.73 50899.50 2879.11 86252.34

Total Revenue ( Net ) 36267.10 51854.86 3901.97 92023.93 32473.73 50899.50 2879.11 86252.34

Results

Segment Results 4098.04 6925.26 606.38 11629.68 1109.80 7302.77 335.10 8747.67

Unallocated Corporate Expenses (net) (1155.32) (951.43)

Operating Profits 10474.36 7796.24

Interest Income / Dividend income 343.23 423.41

Interest Expenses (153.38) (359.33)

Profit Before Exceptional Items and

Taxation

10664.21

7860.32

Exceptional Items (See note 12, Schedule 17) (48.00) (3133.45)

Profit Before Taxation

After Exceptional Items

10616.21

4726.87

Current Tax / Deferred Tax (3550.26) (1666.86)

Fringe benefit Tax (118.50) (108.67)

Short provision for taxation for earlier years (248.09) —

Profit After Tax 6699.36 2951.34

73

2008Rs. Lakhs

2007Rs. Lakhs

Inter– mediates

& Colours

Dyes and Specialty

Chemicals

Master–batches


& Colours

Dyes and Specialty

Chemicals

Master–batches

Total

Other Information

Segment Assets 18824.59 22423.88 2379.24 43627.71 20584.41 22901.86 1787.52 45273.79

Unallocated Corporate Assets 8002.63 6346.88

Total Assets 51630.34 51620.67

Segment Liabilities 4116.66 8065.95 469.17 12651.78 5610.69 9956.63 543.31 16110.63

Unallocated Corporate Liabilities 1505.08 2244.95

Total Liabilities 14156.86 18355.58

Capital Expenditure 646.68 1268.60 767.16 2682.44 1420.62 1993.47 359.58 3773.67

Unallocated Corporate Capital Expenditure 35.20 38.41

Total Capital Expenditure 2717.64 3812.08

Depreciation 1010.59 1100.77 121.84 2233.20 1264.99 841.28 86.58 2192.85

Impairment 728.62 — — 728.62 — — — —

Unallocated Corporate Depreciation 86.35 21.34

Total Depreciation/Amortisation/Impairment 3048.17 2214.19

Non cash expenses other than

Depreciation/Amortisation

525.82

296.07

15.22

837.11

220.20

451.47

20.60

692.27

Unallocated Corporate Non cash expenses

other than depreciation/Amortisation 33.20 13.02

Total Non Cash Expenses other than Depreciation/Amortisation 870.31 705.29

Information about Primary Business Segments : (Contd.)

Notes to the Consolidated Financial Statements

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, Switzerland together hold 63.40% equity shares in the Company, the ultimate holding company being Clariant AG, Switzerland.

Notes:

1 Total assets exclude Advance income tax Rs. 1648.99 Lakhs (Rs.2520.16 Lakhs)

2 Total Liabilities exclude the following :

(a) Proposed dividend Rs. 5065.54 Lakhs (Rs.2666.07 Lakhs)

(b) Tax on dividend Rs. 860.89 Lakhs (Rs. 453.10 Lakhs)

(c) Provision for Taxation Rs. 1177.43 Lakhs (Rs.1178.66 Lakhs)

(d) Deferred Tax liability (Net) Rs. 254.94 Lakhs (Rs. 496.68 Lakhs)

Information about Secondary Segments:

2008

Rs. Lakhs

2007

Rs. Lakhs

Revenue by Geographical Market India Outside India

Total India Outside India Total

External Sales 72990.89 19033.04 92023.93 68205.04 18047.30 86252.34

Segment Assets 40642.78 2984.93 43627.71 42045.12 3228.67 45273.79

Additions to Fixed Assets 2682.44 — 2682.44 3773.67 — 3773.67


(b) Other related parties in the Clariant group where common control exists Fellow Subsidiary Companies BTP Insurance Company Ltd. Clariant Life Science Molecules (Italia) SpA. BTP World S.A. Clariant Masterbatch Ibérica S.A. Clariant (Argentina) S.A. Clariant Masterbatches (Beijing) Ltd. Clariant (Australia) Pty. Ltd. Clariant Masterbatches (Deutschland) GmbH Clariant (Canada) Inc. Clariant Masterbatches (Finland ) Oy Clariant (China) Ltd. Clariant Masterbatches (France) Clariant (Colombia) S.A. Clariant Masterbatches (Guangzhou) Ltd. Clariant (Danmark) A/S Clariant Masterbatches (Italia) SpA. Clariant (Egypt) S.A.E. Clariant Masterbatches (Korea) Ltd. Clariant (Finland) Oy Clariant Masterbatches (Malaysia) Sdn. Bhd. Clariant (Guatemala) S.A. Clariant Masterbatches (Saudi Arabia) Ltd. Clariant (Gulf) FZE Clariant Masterbatches (Shanghai) Ltd. Clariant (Honduras) S.A. de C.V. Clariant Masterbatches (Thailand) Ltd. Clariant (Japan) K.K. Clariant Masterbatches Benelux S.A. Clariant (Korea) Ltd. Clariant Masterbatches Huningue Clariant (Malaysia) Sdn. Bhd. Clariant Masterbatches Ireland Ltd. Clariant (Maroc) S.A. Clariant Masterbatches Norden AB Clariant (Mexico) S.A. de C.V. Clariant Masterbatches UK Ltd. Clariant (New Zealand), Ltd. Clariant Oil Services Scandinavia AS Clariant (Oesterreich) GmbH Clariant Oil Services UK Ltd. Clariant (Pakistan) Ltd. Clariant Participations (The Netherlands) B.V. Clariant (Perú) S.A. Clariant Pigments (Korea) Ltd. Clariant (Singapore) Pte. Ltd. Clariant Pigments (Tianjin) Ltd. Clariant (Sverige) AB Clariant Prodotti (Italia) S.P.A. Clariant (Sverige) Holding AB Clariant Production (France) Clariant (Thailand) Ltd. Clariant Production UK Ltd. Clariant (Tianjin) Ltd. Clariant Productos Químicos S.A. de C.V. Clariant (Uruguay) S.A. Clariant Produkte (Deutschland) GmbH Clariant (Venezuela) S.A. Clariant Produkte (Schweiz) AG Clariant Administração de Bens Ltda. Clariant Reinsurance Ltd. Clariant Advanced Materials GmbH Clariant S.A. Clariant Business Services GmbH Clariant Service (Schweiz) AG Clariant Chemicals (China) Ltd. Clariant Services (Benelux) S.A. / N.V. Clariant Chemicals (Guangzhou) Ltd. Clariant Services (France) Clariant Chemicals (Huizhou) Ltd. Clariant Services UK Ltd. Clariant Chemicals (Taiwan) Co., Ltd. Clariant Servizi (Italia) S.p.A. Clariant Chemicals Trading (Shanghai) Ltd. Clariant Southern Africa (Pty) Ltd. Clariant Chemiebeteiligungen AG Clariant Specialty Chemicals (Zhenjiang) Co. Ltd Clariant Colorquímica (Chile) Ltda. Clariant Specialty Fine Chemicals (France) Clariant Consulting AG Clariant Trading (China) Ltd. Clariant Corporation Clariant Trading (Guatemala) S.A. Clariant Distributie (Nederland) BV Clariant Türkiye A.S. Clariant Distribution (Belgium) S.A. / N.V. Clariant Vertrieb (Deutschland) GmbH & Co. KG Clariant Distribution (France) Clariant Verwaltungs GmbH Clariant Distribution UK Ltd. Dick Peters B.V. Clariant Distribuzione (Italia) S.p.A. Egyptian German Company for Dyes & Resins S.A.E. Clariant Export AG K.J. Quinn Clariant Finance (BVI) Ltd. Lancaster Synthesis Inc. Clariant Finance (Luxembourg) S.A. PCA Hodgson Chemicals Pty. Ltd. Clariant Finance (USA) LLC PT Clariant Indonesia Clariant Finanz AG Ricon Colors Inc. Clariant Horsforth Ltd. Rite Systems East Inc. Clariant Ibérica Comercial S.L. Rite Systems Inc. Clariant Ibérica Producción S.A. Technische Services Gersthofen GmbH Clariant Ibérica Servicios S.L. UK dormant Clariant – Companies Clariant Insurance AG, Liechtenstein US dormant BTP – Companies Clariant Life Science Molecules (Florida) Inc.

c) Key Management Personnel

H. Meier : Vice-Chairman & Managing Director


During the year following transactions were entered into with related parties :

(i) Holding Company and Fellow Subsidiaries

2008 Rs. Lakhs

2007 Rs. Lakhs

Holding Company :


Sales of goods




Purchase of goods




Expenses recovered


Dividend paid


EBITO Chemiebeteiligungen AG 816.71 1470.07

Clariant Participations AG 266.00 478.80




Fellow Subsidiaies


Sales of goods




Clariant UK Ltd — 219.92

Others 4931.52 4732.96



Clariant Export AG 283.67 240.23

Clariant Specialty Fine Chemicals — 44.51

Others 44.70 28.14

Purchase of goods


Clariant (Tianjin) Ltd. 170.67 0.42


Others 211.87 264.80


4. Contingent Liabilities not provided for

31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

I (a) in respect of income tax mattersdecided against the Company, in respect of which the Company is in further appeal

856.16

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 494.22 494.22

(c) in respect of excise matters 455.66 455.66

(d) in respect of bills of exchange discounted with banks [ since realised Rs. 17.73 Lakhs ( Rs.1308.00 Lakhs ) ]

29.60 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.121 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.

2008 Rs. Lakhs

2007 Rs. Lakhs

Purchase of capital goods

Clariant MasterBatch GmbH 170.08 225.31

Clariant Produkte (Deutschland) GmbH — 41.15

Clariant Masterbatches (Italia) SpA. 23.34 —


PT Clariant Indonesia 8.19 9.06

Clariant (Singapore) Pte. Ltd 29.65 24.32


Clariant SA Brazil 10.51 17.26

Clariant Southern Africa (Pty) Ltd 8.86 2.24

Others 20.60 20.36

Expenses recovered

Clariant Produkte (Deutschland) GmbH 4.49 —

Others 0.78 —




(ii) Key Management Personnel :

Remuneration 164.97 152.50

Commission payable 26.75 21.00

During the year following transactions were entered into with related parties : (Contd.)

(i) Holding Company and Fellow Subsidiaries (Contd.)

77

31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

5. Estimated amount of contracts remaining to be executed on capital account and not provided for 201.56 156.61

Notes to the Consolidated Financial Statements

31–12–2008Rs. Lakhs

31–12–2007Rs. Lakhs

Deferred Tax Assets

a) Provision for doubtful debts 95.50 27.46

b) Provision for retirement benefits 327.47 192.91

c) Expenses allowable for tax purposes when paid 53.54 53.54

d) Integration expenses 78.70 141.66

e) Payment/Provision for Voluntary retirement scheme 552.46 832.09

f) Others 1.23 1.23

1108.90 1248.89

Deferred Tax Liabilities

Depreciation / Amortisation / Impairment (1363.84) (1745.57)

Deferred Tax Assets/(Liabilities) – Net (254.94) (496.68)

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

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

2008

Rs. Lakhs

2007

Rs. Lakhs

Directors’ sitting fees 0.90 1.40

Salaries 136.17 131.40

Commission 34.75 29.00*

Provident Fund 1.89 —

Other perquisites and benefits in cash or in kind 0.16 0.10

173.87 161.90

* Actual paid during the year Rs. 19.58 Lakhs and Rs. 9.42 Lakhs reversed during the year.

2008

Rs. Lakhs

2007

Rs. Lakhs

(a) Net profit after taxation ( Rupees in Lakhs) 6699.36 2951.34

(b) Number of equity shares outstanding 26660745 26660745

(c) Basic and Diluted earnings per share (In Rupees) 25.13 11.07

(d) Face value per share (In Rupees) 10.00 10.00

8. Earnings Per Share :


10. Expenditure on Research and Development

2008

Rs. Lakhs

2007

Rs. Lakhs

(a) Capital expenditure 9.93 4.58

(b) Revenue expenditure charged to Profit and loss account 323.29 338.70

333.22 343.28

11. Miscellaneous Expenses in Schedule 16 : Other Expenditure include Auditors’ remuneration and expenses :

(Excluding Service tax)

2008

Rs. Lakhs

2007

Rs. Lakhs

(i) Audit fees 25.00 23.00

(ii) Company law matters — 0.50

(iii) Taxation services — 0.74

(iv) Other services 37.50 47.50

(v) Out of pocket expenses 0.11 1.75

62.61 73.49

12. Exceptional items in Profit & Loss Account include

2008

Rs. Lakhs

2007

Rs. Lakhs

(a) Termination benefits to Employees / Contractors 48.00 2671.80

(b) Write off of assets (Net of recovery of Rs. 141.00 Lakhs) due to restructuring — 461.65

48.00 3133.45

9. In respect of all assets taken on lease on or after 1st April, 2001

2008

Rs. Lakhs

2007

Rs. Lakhs

(a) In respect of Operating leases, where lease agreements have been formally entered into, minimum lease payments recognised in the Profit and loss account for the year are as follows : Residential flats, office premises, vehicles, equipment and machinery, computers etc.

377.91

326.70

(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 326.65 322.42

For a period later than one year and not later than five years 343.68 405.78

Total 670.33 728.20


13. Employee Benefits

(a) Defined benefit Plans – As per Actuarial valuation as on December 31, 2008

Gratuity 2008

Rs. Lakhs

2007

Rs. Lakhs

Funded Unfunded Funded Unfunded

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


2. Interest cost 142.81 6.01 169.14 5.06

3. Expected return on plan assets (194.58) — (216.83) —

4. Net acturial (gain)/loss recognised during the year 234.40 (5.81) 41.07 (15.03)

5. Expense /(Income) recognised in Profit & Loss account 373.26 4.56 194.04 (6.53)

[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 year


2. Actuarial gain/(loss) on plan assets 39.51 — (57.99) —

3. Actual return on plan assets 234.09 — 158.84 —

(iii) Net Asset/(Liability) recognised in the Balance Sheet as at the year end

1. Present value of the Defined Benefit obligation 2940.12 84.42 2551.45 80.18

2. Fair value of plan assets 2553.09 — 2432.22 —

3. Net Asset/(Liability) recognised in the Balance Sheet (387.03) (84.42) (119.23) (80.18)

(iv) Change in Defined Benefit obligation during the year

1. Present value of obligation as at the beginning of the year 2551.45 80.18 2945.82 90.03


3. Interest cost 142.81 6.01 169.14 5.06

4. Benefits paid (218.68) (0.32) (747.25) (3.32)

5. Actuarial (gain)/loss on obligation 273.91 (5.81) (16.92) (15.03)

6. Present value of obligation as at the end of the year 2940.12 84.42 2551.45 80.18

(v) Changes in Fair value of plan asset during the year

1. Fair value of plan assets as at the beginning of the year 2432.22 — 2710.36 —


3. Contributions made 105.46 — 310.27 —

4. Benefits paid (218.68) — (747.25) —

5 . Actuarial gain/(loss) on plan assets 39.51 — (57.99) —

6 . Fair value of plan assets as at the end of the year 2553.09 — 2432.22 —

(vi) Major categories of plan assets as a percentage of total plan assets

1. Central Government securities 24.84% — 25.05% —

2. State Government securities 10.03% — 9.89% —

3. Private Sector bonds 15.21% — 13.64% —

4. Special deposit scheme 21.69% — 22.77% —

5. Cash at Bank 1.10% — 1.95% —

6. Investment in Insurance companies 22.67% — 22.30% —

7. Others 4.46% — 4.40% —

(vii) Actuarial assumptions

1. Discount rate 7.0% 7.0% 8.0% 8.0%

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%





14. During the year, the Company has changed the rate of depreciation for Airconditioner from 4.75% to 20.00%, Motor Cars from 20.00% to 25.00% ,Plant, Machinery and Pipelines from 10.34% to 10.00% and Electrical Fittings Installation from 4.75% to 10.00% . As a result of the change in rate of depreciation, the depreciation charge for the year is higher and profit before tax for the year is lower, each by Rs.180.34 Lakhs.


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

31–12–08 Rs. Lakhs

31–12–07 Rs. Lakhs

Other Long Term Benefits

The Defined Benefit Obligations which are provided for but not funded are as under:

Compensated Absence/Leave Salary 491.71 487.19

( 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 thebeginning of the year, for returns over the entire life of the related obligation.

( e ) 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 93.02 170.35

Contribution/Provision for provident fund, superannuation scheme, gratuity fund etc, includes –

Provident Fund and Family Pension 278.81 316.73

Superannuation Fund 370.57 256.86

Gratuity Fund 377.82 187.51

Other funds 1.00 2.11

81

Financial Year Ended 31st December Financial Year Ended 31st March

2008 2007 ****2006 ***2006 2005 2004 2003 2002 2001 2000

I OPERATING RESULTS

Gross Sales 10014.5 9517.1 7538.9 9246.5 4035.2 4083.4 3821.7 3310.1 3301.9 3143.8

Net Sales 9163.9 8614.4 6870.4 8479.1 3656.1 3746.8 3492.8 2990.1 2991.8 2817.9

Gross Earnings Before Depreciation/ Impairment And Taxation

+1375.7 +1021.3 +655.7 893.1 472.5 380.0 343.7 273.0 236.8 401.7

Profit Before Taxation #1072.9 #493.3 #507.8 648.4 * 357.8 249.5 214.7 141.6 114.8 281.5

Profit After Taxation 674.8 317.9 328.7 403.9 155.9 335.7 149.7 90.6 89.8 211.5

Equity Dividend 506.6 266.6 479.9 293.3 69.9 69.9 69.9 58.3 46.6 75.7

II FINANCIAL POSITION

Gross Fixed Assets 3985.1 3819.6 3831.7 3850.2 2105.6 1934.0 1973.8 1930.3 1912.7 1843.7

Net Fixed Assets 1646.0 1719.1 1651.8 1601.6 837.2 737.7 804.7 862.9 935.0 961.6

Investments 578.4 294.3 465.0 1132.6 464.5 204.5 85.0 85.0 87.4 187.8

Net Current Assets 1008.3 1164.8 1128.2 1198.7 743.5 741.5 843.3 982.1 1017.2 788.8

Equity 266.6 266.6 266.6 **266.6 116.5 116.5 116.5 116.5 116.5 116.5

Reserves 2909.8 2827.6 2835.8 3054.4 1605.7 1529.6 1272.7 1200.6 1303.9 1268.4

Shareholders’ Fund 3176.4 3094.2 3102.4 3321.0 1722.2 1646.1 1389.2 1317.1 1420.4 1384.9

Loans And Deferred Payment Credits 30.9 40.7 62.1 559.4 339.4 110.4 236.4 474.0 619.2 553.3

Capital Employed 3207.3 3134.9 3164.5 3880.4 2061.6 1756.5 1625.6 1791.1 2039.6 1938.2

III PER EQUITY SHARE@

Earnings (Rupees) #25.31 #11.92 #12.33 (Not

Annualised

15.15 13.30 28.82 12.96 7.97 7.45 180.0

Dividend 19 10 18 11 6 6 6 5 4 65

# After exceptional items

+ Before exceptional items

@ Face value sub-divided to Rs.10/- in October 2000

* 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 month ended December 31, 2006

Financial Performance 10 Years’ Highlights

(Rs. Million)

Our three brand values “value focus”, “service

leadership” and “dialogue commitment” help us to

achieve a unique identity and form the cornerstones of

our relationship with our key stakeholders namely our

customers, employees and investors.

� Value Focus

For the benefit of all stakeholders Clariant will aim

for profitable, sustained growth based on a strategy

linked to binding values.

� Service Leadership

With professional advisory services, an impressive

talent for innovation combined with customized

services and applications, Clariant helps customers

to achieve their production and economic targets.

� Dialogue Commitment

An ability to engage in dialogue, integrity and

trustworthy relationships set Clariant apart.

Clariant’s Brand Values

2 Corporate Management

7 Financial Performance

9 Notice

12 Directors’ Report

16 Management Discussion and Analysis

20 Report on Corporate Governance

28 Auditors’ Report

32 Balance Sheet

33 Profit and Loss Account

34 Cash Flow Statement

36 Schedules to Balance Sheet

41 Schedules to Profit and Loss Account

43 Notes

58 Statement relating to the Subsidiary Company

59 Auditors’ Report on Consolidated Financial Statements

60 Consolidated Financial Statements

81 10 Years’ Highlights

Index

Clariant in India is committed to ensuring sustainable development of our company and planet earth, simultaneously. Caring for greener surroundings, reduction in wastes and emissions, innovating and nurturing a range of green products in our portfolio, enhancing work place safety, etc. are initiatives on which we place a premium. Our range of lead chrome free pigments, non-halogenated flame retardants, heavy metal free masterbatches for food packaging applications, the 4E’s from textile dyes – environment, efficiency, ecology and economy, etc. are but a few examples of how we are nurturing a more safer yet colorful world for our children to inherit !

Welcome to a Sustainable, Colorful World!


Annu

al R

epor

t 200

8

Annual Report 2008Clariant Chemicals (India) Limited

www.clariant.in

Clariant Chemicals (India) LimitedRavindra Annexe194 Churchgate ReclamationMumbai 400 020

Tel.:

282

1 68

51/ 2

837

6401

, E-m

ail:

info

@dh

oteo

ffset

.net

clariant chemicals (india) limited l.: …...annual report 2008 annual report 2008 clariant...

Documents