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EVENTS OF THE YEAR

Mr. V Ramesh Rao, Director inaugurating theAll India Distributor Conference 2007-08at Bali, Indonesia

The 5 TPH coal fired boilercommissioned at Pashamylaram,Speciality Chemicals Division

Pride 4T Plus 10N-30 launch meet at AhmedabadJaipur & Rajkot

Start of new mining project at Nigahi,under Northen Coalfields Ltd. in February 2008

SAP IMPLEMENTATION AT HYDERABAD

Training & Implementation5th June to 30th September 2007for 3 Divisions GO-LIVE event on 5th October 2007

•Kick-off Meet' on 5th June 2007

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GULF OIL Corporation LimitedFORTY SevenTH AnnUAL RePORT 2007-2008

Ten Year Review ..............................................................02Notice ...............................................................................03 Directors’ Report...............................................................08Corporate Governance Report .........................................18Shareholders’ Information ................................................22

COnTenTSAuditors’ Report ................................................................27Balance Sheet ..................................................................30Profit and Loss Account....................................................31Consolidated Balance Sheet ............................................57

Consolidated Profit and Loss Accounts ............................58

Company Secretary S. SubramanianDeputy Company Secretary A. Satyanarayana

Bankers State Bank of India Andhra BankState Bank of Hyderabad IDBI Bank Ltd

Oriental Bank of Commerce Bank of Bahrain & Kuwait B.S.C.ICICI Bank Limited

Auditors Deloitte Haskins & Sells, Chartered Accountants, SecunderabadShah & Co., Chartered Accountants, Mumbai (Branch Auditors)

Registered/Corporate Office Kukatpally,Hyderabad - 500 072Andhra Pradesh

Board of Directors(As on 24th May, 2008)

S.G. Hinduja, ChairmanR.P. Hinduja, Vice ChairmanK.N. Venkatasubramanian P. N. GhataliaH.C. AsherM.S.RamachandranAshok Kini Vinoo S HindujaA.V. DujeanV. Ramesh RaoVinod K Dasari S. Pramanik, Managing DirectorA.K.Das, Alternate Director to S.G.HindujaCamille Nehme, Alternate to A.V.DujeanPrabal Banerjee, Alternate to Vinoo S Hinduja (effective 28th September, 2007)

Committees of the BoardAudit: P.N. Ghatalia, Chairman H.C. Asher Ashok KiniRemuneration: P.N. Ghatalia, Chairman H.C. Asher M.S.Ramachandran Vinoo S HindujaShare Transfer & Investor Grievance: Ashok Kini, Chairman S. Pramanik Vinod K Dasari

executive TeamCorporate: S. Subramanian CFO & Company Secretary V.Satish Kumar Sr.GM (Operational Audit)

Lubricants Division: Ravi Chawla President R. Varadarajan VP (Sales & Marketing)N.Chandrasekaran VP (Finance & Accounts) S.Vishwanathan Sr.GM (Filters)Y.P. Rao VP Technical Amrish Kathane Sr.GM - Supply Chain

S. Das GM (South)

explosives Division: S. Chakrabarti Chief Operating Officer A.D.Sao Sr.GM (Marketing Area – I)Dr. Mohan Kidambi Sr.GM (Operations) A.M. Kazmi GM (Exports & Marketing

Area – II) Speciality Chemicals Division:

Dr. M.V.Rao Dr. Alok Sharma

Vice PresidentGM (Pashamylaram Works)

Contracts Division: T.T.Das GM

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A Ten YeAR RevIeW(Rs. lakhs)

Year 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99

INCOME & DIVIDENDS

Sales 83321.52 66865.64 50724.65 47340.47 41551.04 40534.71 25250.68 19569.69 15191.43 14257.44

Profit Before Tax 2970.60 3183.37 2543.43 2215.07 2798.39 1132.93 978.55 6084.32 568.29 557.48

Profit After Tax 2513.17 2300.59 2278.6 2003.07 2290.80 1531.52 769.55 5464.32 508.29 502.48

Profit After Tax as percentage of Sales

3.02% 3.44% 4.49% 4.23% 5.51% 3.78% 3.05% 27.92% 3.35% 3.52%

Earning Per Share (Rs.) 3.42 # 16.58 16.43 14.44 16.51 11.04 8.12 68.29 6.35 6.28

Dividend per fully paid Equity Share (Rs.)

1.50 # 7.50 7.00 6.50 6.00 5.00 3.00 5.00 2.50 2.50

Dividend 1115.38 1115.38 971.02 901.66 832.30 693.59 416.15 400.09 200.04 192.47

(Rs. lakhs)

Year 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99

CAPITAL EMPLOYED

Net Fixed Assets 200424.32 15647.14 11367.26 10560.95 8215.47 7943.98 8024.33 4196.39 4056.82 3986.85

Net Working Capital 22592.43 14451.81 9597.43 8130.11 9837.19 12593.26 17173.69 10046.86 5306.10 4946.58

Other Assets 6992.93 7980.24 5278.71 4839.49 2394.70 984.10 2211.82 1404.98 1718.79 1126.05

Total Capital Employed 230009.68 38079.19 26243.4 23530.55 20447.36 21521.34 27409.84 15648.23 11081.71 10059.48

(Rs. lakhs)

Year 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99

NETWORTH & LOANS

Shareholders’ Funds:

Capital 1487.17 1387.17 1387.17 1387.17 1387.17 1387.17 1387.17 800.17 800.17 800.17

Reserves 203901.39 14388.71 13393.06 12221.67 11246.72 10454.43 12943.00 9317.35 4293.93 4007.68

Tangible Networth 204717.18 15237.06 14284.78 12827.12 12045.21 11841.60 14330.17 10117.52 5094.10 4807.84

Secured Loans 13457.72 15547.27 8147.69 8243.71 6224.07 7593.02 11206.99 3965.37 5987.61 5251.63

No.of Shareholders at year end 56218 43790 43840 45893 47605 48945 46969 47393 48380 4125

Note: Sales figure includes Excise Duty

# Equity Shares of Rs. 10 each have been split into 5 equity shares of Rs. 2 each.

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nOTICe OF THe FORTY SevenTH AnnUAL GeneRAL MeeTInG

nOTICe is hereby given that the Forty Seventh Annual General Meeting of the Company will be held at 2.30 p.m. on Thursday, the 25th day of September, 2008 at Grand Ball Room, Hotel Taj Krishna, Hyderabad - 500 034 to transact the following:

ORDInARY BUSIneSS

1. To consider and adopt the Directors’ Report, the Auditors’ Report, the Balance Sheet as at 31st March 2008 and the Profit and Loss Account for the year ended 31st March 2008.

2. To declare dividend for the financial year ended 31st March 2008.

3. To appoint a Director in place of Ms. Vinoo S Hinduja, who retires by rotation under Article 122 of the Articles of Association of the Company and is eligible for re-appointment.

4. To appoint a Director in place of Mr.V.Ramesh Rao, who retires by rotation under Article 122 of the Articles of Association of the Company and is eligible for re-appointment.

5. To appoint a Director in place of Mr.P.N.Ghatalia, who retires by rotation under Article 122 of the Articles of Association of the Company and is eligible for re-appointment.

6. To appoint a Director in place of Mr. M.S. Ramachandran, who retires by rotation under Article 122 of the Articles of Association of the Company and is eligible for re-appointment.

7. 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, Secunderabad be and are hereby appointed as Auditors of the Company from the conclusion of this meeting until the conclusion of the next Annual General Meeting on a remuneration to be negotiated and fixed by the Audit Committee/Board of Directors of the Company in addition to actual out-of-pocket expenses incurred by them for the purpose of audit.

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

ReSOLveD THAT M/s. Shah & Co., Chartered Accountants, Mumbai be and are hereby appointed as Branch Auditors of the Company for its Lubricants Division at Mumbai from the conclusion of this meeting until the conclusion of the next Annual General Meeting on a remuneration to be negotiated and fixed by the Audit Committee/Board of Directors of the Company in addition to actual out-of-pocket expenses incurred by them for the purpose of audit.

SPeCIAL BUSIneSS:

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

ReSOLveD THAT subject to the approval of the shareholders and pursuant to the provisions of Section 269,198, 309, 310 of the Companies Act, 1956 read with Schedule XIII to the said Act, as amended from time to time, and other applicable provisions if any, Mr. Subhas Pramanik be and is hereby reappointed as the Managing Director for a period of three years effective 8th July, 2008, under the terms and conditions set out in the Explanatory Statement annexed to the Notice of General Meeting under Section 173 of the Companies Act, 1956.

10. 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 Section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956, the Foreign Exchange Management Act, 1999 (including any statutory modification(s) or re-enactment thereof for the time being in force), and the applicable laws, Rules, Guidelines, Regulations, Notifications

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and Circulars, if any, issued by the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), the Government of India (GOI), the Foreign Investment Promotion Board (FIPB), and other concerned and relevant authorities, and other applicable Indian laws, rules and regulations, if any, and relevant provisions of Memorandum and Articles of Association of the Company and the Listing Agreement entered into by the Company with the Stock Exchanges where the Shares of the Company are listed and subject to such approval(s), consent(s), permission(s) and sanctions(s) as may be required from GOI, FIPB, RBI, SEBI and any other appropriate authorities, institutions or bodies, as may be necessary and subject to such conditions as may be prescribed by any of them while granting any such approval, consent, permission or sanction which may be agreed by the Board of Directors of the Company (“the Board”) (which term shall be deemed to include ‘Offering Committee’ or any other Committee constituted or hereafter be constituted for the time being exercising the powers conferred on the Board by this Resolution), which the Board be and is hereby authorized to accept, if it thinks fit in the interest of the Company, the consent and approval of the Company be and is hereby accorded to the Board to issue Securities (as defined below) by way of a direct issuance and allotment of Shares in the form of Equities, Shares, Warrants, Bonds or Debentures, Depository Receipts, (whether Global Depository Receipts (GDRs), American Depository Receipts (ADRs) or any other form of Depository Receipts), or any other debt instrument either convertible or nonconvertible into Equity Shares whether optionally or otherwise, including Foreign Currency Convertible Bonds (FCCBs), whether expressed in Foreign Currency or Indian Rupees (all of which are hereinafter collectively referred to as “Securities”) whether secured or unsecured, and further the Board of Directors be and are authorized, subject to applicable laws and regulations, to issue the Securities to investors (including but not limited to Foreign Banks, Financial Institutions, Foreign Institutional Investors, Qualified Institutional Buyers, Mutual Funds, Companies, other Corporate Bodies, Non- Resident Indians, Foreign Nationals and other eligible investors as may be decided by the Board (hereinafter referred to as “Investors”) whether or not such Investors are members, promoters, directors or their relatives, of the Company by way of one or more private or public offerings (and whether in any domestic or international markets), through a public issue(s), private placement(s), Qualified Institutions Placement(s), preferential issue(s) or a combination thereof in such manner and on such terms and conditions as the Board deems appropriate at their absolute discretion. Provided that the issue size shall not exceed US$100 million or Rs.450 crores inclusive of such premium as may be payable on the Equity Shares, at such time or times and at such price or prices and in such tranche or tranches as the Board in its absolute discretion deems fit.

ReSOLveD FURTHeR THAT without prejudice to the generality of the above, the aforesaid issuance of the Securities may have to be subject to such terms or conditions as are in accordance with prevalent market practices and applicable Laws and Regulations, including but not limited to, the terms and conditions relating to payment of interest, dividend, premium on redemption, the terms for issue of additional Shares or variations in the price or period of conversion of Securities into Equity Shares or terms pertaining to voting rights or options for redemption of Securities.

ReSOLveD FURTHeR THAT the Board be and is hereby authorised to seek, at their absolute discretion, listing of Securities issued and allotted in pursuance of this resolution, listed on any Stock Exchanges in India, and/or Luxembourg/London/Nasdaq/New York Stock Exchanges and/or any other Overseas Stock Exchanges.

ReSOLveD FURTHeR THAT the Board be and is hereby authorised to issue and allot such number of Equity Shares as may be required to be issued and allotted upon conversion of any Securities referred above as may be necessary in accordance with the terms of offering, and that the Equity Shares so allotted shall rank in all respects pari passu with the existing Equity Shares of the Company.

ReSOLveD FURTHeR THAT subject to the approvals stated above, the Company be also permitted to retain oversubscription upto 25% of the amount issued and the Board of Directors or Committee of Directors constituted for the purpose be authorised to decide the quantum of oversubscription to be retained.

ReSOLveD FURTHeR THAT the Board of Directors be and are hereby authorised to do all such acts, deeds, matters and changes as it may at its discretion deem necessary or desirable for such purpose including, if necessary, creation of such mortgages and/or charges in respect of the Securities on the whole or any part of the undertaking of the Company under Section 293(1)(a) of the Companies Act, 1956 and to execute such documents or writing as they may consider necessary or proper and incidental to this Resolution.

ReSOLveD FURTHeR THAT the Board of Directors or any Committee thereof be and is hereby authorised to do all such acts, deeds, matters and things as it may at its discretion deem necessary, expedient or desirable for such purpose including without limitation to the utilization of issue proceeds, finalizing the pricing, terms and conditions

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relating to the issue of aforesaid Securities including amendments or modifications thereto as may be deemed fit by them, to sign, execute and issue consolidated receipt/s for the Securities, listing application, various agreements such as Subscription Agreement, Depository Agreement, Trustee Agreement, undertakings, deeds, declarations, Letters and all other documents and to do all such acts, deeds, matters and things, and to comply with all the formalities as may be required in connection with and incidental to the aforesaid offering of Securities, including but not limited to the post issue formalities and with power on behalf of the Company to settle any question, difficulties or doubts that may arise in regard to any such issue or allotment of the Securities as it may in its absolute discretion deem fit.

ReSOLveD FURTHeR THAT the Board of Directors or any Committee thereof be and are hereby authorized to enter into and execute all such arrangements/agreements as may be required for appointing Managers (including Lead Managers), Merchant Bankers, Underwriters, Financial and/or Legal Advisors, Tax Advisors, Consultants, Depositories, Custodians, Principal Paying/Transfer/Conversion agents, Listing Agents, Registrars, Trustees and all such agencies as may be involved or concerned in such offerings of Securities, whether in India or abroad, and to remunerate all such agencies including the payment of commissions, brokerage, fees or the likes, and also to seek the listing of such Securities or Securities representing the same in one or more stock exchanges whether in India or outside India, as may be required by applicable laws.

By Order of the Board

S.SUBRAMANIANPlace : Hyderabad Chief Financial Officer &Date : July 24, 2008 Company Secretary

notes:

1. A MEMBER ENTITLED TO ATTEND AND vOTE IS ENTITLED TO APPOINT A PROxY TO ATTEND AND vOTE INSTEAD OF hIMSELF AND A PROXY NEED NOT BE A MEMBER.

Proxies, in order to be effective, should be duly stamped, completed, signed and deposited at the Registered Office of the Company not less than 48 hours before the meeting.

2. An Explanatory Statement pursuant to Section 173 of the Companies Act, 1956, relating to the Special Business to be transacted at the meeting is annexed hereto.

3. The Register of Members and Share Transfer Books will be closed from 16th September, 2008 to 25th September,2008 (both days inclusive) in connection with the ensuing Annual General Meeting and the payment of Dividend.

4. Dividend recommended by the Board and approved by the Members at the AGM, will be paid on or before October 24, 2008. In respect of shares held in physical form, the dividend will be payable to those members whose names appear on the Register of Members on September 25, 2008. In respect of shares held in electronic form, dividend will be payable to beneficial owners of the shares as on September 25, 2008 as per details furnished by the Depositories for this purpose.

5. In terms of Sections 205A and 205C of the Companies Act, 1956, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the date of transfer to the unpaid dividend account, is required to be transferred to the Investor Education and Protection Fund. Accordingly, in the year 2008-09, the Company would be transferring the unclaimed dividend for the year 2000-01 to the Investor Education and Protection Fund. Members who have not encashed their dividend warrant for the year ended March 31, 2001 or thereafter are requested to write to the Company/Registrars and Share Transfer Agents.

6. Members holding shares in dematerialized mode are requested to instruct their respective Depository Participants regarding Bank Accounts in which they wish to receive the dividend. However, the Bank details as furnished by the respective Depositories to your Company will be used for the purpose of distribution of dividend through Electronic Clearing Service (ECS) as directed by the Stock Exchanges. Your Company/Registrar and Share Transfer Agents will not act on any direct request from Members holding shares in dematerialized form for change/deletion of such Bank details.

7. Members holding shares in physical form are requested to inform the Company/Registrars and Share Transfer Agents of any change in their addresses immediately for future communication at their correct addresses and Members holding shares in demat form are requested to notify to their Depository Participants.

8. Members holding shares in identical order of names in more than one folio are requested to write to the Company’s Share Transfer Agents to enable them to consolidate their holdings into one folio.

9. As required under Clause 49 of the Listing Agreement, brief information of Directors, being appointed/reappointed, is given in the Directors’ Report.

10. Members requiring any clarification/information on any report/statements, are requested to send their queries to the Registered Office of the Company, at least 10 days before the date of the AGM.

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AnneXURe TO THe nOTICeexplanatory Statement pursuant to Section 173(2) of the Companies Act, 1956.

Item no.9

The term of Mr. Subhas Pramanik as Managing Director of the Company was upto 7th July 2008. The Board of Directors of the Company, at its Meeting held on 24th May 2008 appointed him as the Managing Director of the Company for a period of three (3) years effective from 8th July 2008 and authorized the Remuneration Committee to approve the remuneration. The Remuneration Committee reviewed the performance of Mr. Subhas Pramanik and approved the following remuneration, subject to the approval of the Shareholders at a General Meeting:

PERIOD Three Years from 8th July 2008

BASIC SALARY Rs. 2,34,800 p.m on a grade of Rs. 2,00,000 - 4,00,000

The annual increment to be decided by the Remuneration Committee, based on his performance.

PERQUISITES Rs. 21,13,200 per year which will include housing either as a Company Lease or hRA not exceeding 60% of the Salary, furnishings, gas, electricity and water, Medical Benefits, Leave Travel concessions for self and family, Personal Accident Cover, Club Membership Fees and Special Allowance. The amount to be paid towards Medical Benefits, Leave Travel concession, Personal Accident Cover, Club Membership Fees and Special Allowance would be decided by the Committee within the overall ceiling of perquisites approved. The annual value of these perquisites shall be restricted to an amount not exceeding 75% of the annual salary of Mr. Pramanik each year.

Contribution to Provident Fund and Superannuation Fund would be as per the Scheme of the Company. Gratuity would be payable as per the norms prescribed under Schedule XIII. Provision of (i) car for official duties with driver and (ii) telephone at his residence for official purposes.

In addition to this, the Managing Director will be entitled to a maximum commission of 1% of net profits of the Company calculated under Section 349 & 350 of the Companies Act, 1956 as may be decided by the Board.

In the year of inadequate profits, the Managing Director would be entitled to all the above remuneration except the commission.

Mr. Subhas Pramanik shall be entitled to leave on full pay and allowances as per the Rules of the Company.

The above appointment will be terminable by 6 months notice from either side. The terms of his appointment as Managing Director would be non-rotational.

Mr. Subhas Pramanik is concerned or interested in the above terms of appointment.

Mr. Subhas Pramanik is a Director of the following companies, namely IDL Buildware Ltd., IDL Agro Chemicals Ltd., and Gulf Caressorie Ltd., which are all subsidiaries of the Company, and APDL Estates Ltd.

The Board recommends this resolution for your approval.

Statement of Information as required under Part-II of Schedule XIII to the Companies Act, 1956:

I GeneRAL InFORMATIOn:(1) Nature of Industry. Industrial Explosives, Lubricating Oils, Mining Infrastructure

Contracts, Bulk Drugs and Property Development.(2) Date or expected date of commencement of

production.N.A.

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

N.A.

(4) Financial performance based on given indicators. As per the financial statements forming part of this Annual Report.

(5) Export performance and net foreign exchange collaborations.

As per the financial statements forming part of this Annual Report.

(6) Foreign investments or collaborators, if any As per the financial statements forming part of this Annual Report.

II InFORMATIOn ABOUT THe APPOInTee:(1) Background Details, Past Remuneration and

Recognition or AwardsMr. Subhas Pramanik is a Bachelor of Chemical Engineering from Jadavpur University, Kolkata and obtained his Masters Degree in Financial Management from Jamnalal Bajaj Institute of Management Studies, Mumbai. he is a Certified Associate of the Indian

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Institute of Bankers, a Fellow Member of the Institute of Company Secretaries of India and the Institute of Cost and Works Accountants of India. He worked as Group Vice President- Corporate Affairs in Universal Ferro and Allied Chemicals Limited and as Group vice President (Finance) of hinduja Group India Ltd. he was also Executive Director (Commercial), Gulf Oil India Ltd. and Deputy Managing Director of IDL Industries Ltd.Details of past remuneration have been furnished elsewhere in the Corporate Governance Report forming part of this Report.

(2) Job profile and his suitability Mr. Subhas Pramanik has been Managing Director of the Company for the last more than 9 years during which period, the turnover of the Company has grown from Rs.142 crores (1998-99) to Rs. 833 crores (2007-08). The operations of the Company have been well diversified from a single line of business into multi lines.

(3) Remuneration Proposed Has been furnished in the Explanatory Statement to the Resolution for appointment of the Managing Director.

(4) Comparative remuneration profile with respect to industry, size of the company, profile of the position and person (in case of expatriates the relevant details would be w.r.t. the country of his origin)

The company being a diversified Company, there is no comparable / identical company.

(5) Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any.

None

III OTHeR InFORMATIOn(1) Reasons of loss or inadequate profits. }(2) Steps taken or proposed to be taken for

improvementN.A.

(3) Expected increase in productivity and profits in measurable terms.

Item no.10With a view to augment long term financial resources of the Company and to meet costs in connection with the expansion, diversification projects and other permissible uses, it is proposed to raise an amount not exceeding US$ 100 millions or Rs.450crores through issue of Foreign Currency Convertible Bonds (FCCBs) and / or American Depository Receipts (ADRs) or Global Depository Receipts (GDRs) and/or Qualified Institutions Placement and/or any other suitable financial instruments as contained in the Resolution.

The salient features are mentioned in the resolution and will be issued on such terms and conditions as may be appropriate at the time of issue.

The FCCBs/ADRs/GDRs/any other financial instruments including Qualified Institutions Placement, would be listed on the London and/or any other Stock Exchange within or outside India.

The Special Resolution gives adequate flexibility and discretion to the Board to finalise the terms of the issue in consultation with the lead managers, underwriters, legal advisers and experts or such other authorities as need to be consulted including in relation to the pricing of the issue.

The consent of the shareholders, is therefore, sought to authorise the Board of Directors as set out in the Resolution to issue in one or more tranches, the securities referred to therein in the Indian market to eligible investors or international market to Foreign Financial Institutions, to Foreign Investors/Collaborators/Companies and/or to Foreign Investment Institutions operating in India, whether shareholders of the Company or not, through a public issue or private placement basis and/or preferential basis or Qualified Institutions Placement.

None of the Directors is as such concerned or interested in the resolution.

The Board recommends this Resolution for your approval.By Order of the Board

S.SUBRAMANIANPlace : Hyderabad Chief Financial Officer &Date : July 24, 2008 Company Secretary

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RePORT OF THe BOARD OF DIReCTORS AnD MAnAGeMenT DISCUSSIOn AnD AnALYSIS TO SHAReHOLDeRS FOR THe YeAR enDeD 31ST MARCH, 2008

Your Directors have pleasure in presenting their Forty Seventh Annual Report and Audited Accounts for the year ended 31st March 2008.

1. FInAnCIAL ReSULTS

2007-08Rupees Lakhs

2006-07Rupees Lakhs

Profit after providing for Depreciation of Rs. 1602.27 lakhs ( Rs. 1002.14 lakhs ) and before extraordinary items and taxation 3464.37 3645.69

Extraordinary Items:Compensation under Voluntary Retirement Scheme 493.77 462.32

Profit Before Taxation 2970.60 3183.37

Taxation:

Current 350.00 354.00

Tax provision of earlier years written back - (59.32)

Deferred (6.00) 468.00

FBT 113.43 120.10

Profit After Taxation 2513.17 2300.59

Balance brought forward from previous year 3853.72 3108.07

Balance available for appropriation 6366.89 5408.66

Appropriations: Proposed Dividend Provision for additional tax on proposed dividend

1115.38189.56

1115.38189.56

Transfer to General Reserve 260.00 250.00

Balance carried to Balance Sheet 4801.95 3853.72

EPS 3.42 3.32

2. DIvIDenD

The Directors recommend the payment of Dividend of Rs. 1.50 per share ( Rs. 1.50 per share ) on the paid up capital of the Company. The dividend of Rs. 11.16 crores ( Rs. 11.16 crores ), if approved by the Shareholders at the Forty-seventh Annual General Meeting, will be paid out of the profits for the current year to all Shareholders of the Company whose names appear on the Register of Members as on date of Book Closure.

3. OPeRATIOnS

The total revenue of the Company increased to Rs. 833.22 crores (Rs. 668.66 crores). The profit before extraordinary items and taxation was Rs. 34.64 crores (Rs. 36.46 crores). The profit before tax was Rs. 29.71 crores (Rs. 31.83 crores) after making a higher provision for vRS spend in the current year. The profit after provision for tax of Rs. 3.50 crores, Fringe Benefit Tax of Rs. 1.13 crores and Deferred Tax of Rs. 0.06 crores, was Rs. 25.13 crores (Rs. 23.01 crores) resulting in an EPS of Rs. 3.42 for the year (Rs. 3.32).

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DIvISIOnAL PeRFORMAnCe

3.1 Business Operations

3.2 Industrial explosives

The Explosives Division manufactures a full range of commercial explosives and blasting accessories for mining, infrastructure, space, defence and special applications. The Explosives Division range covers small and large diameter cartridge slurry explosives, small diameter and pumpable emulsion explosives. Blasting accessories include electric, non-electric and electronic detonators of various delay timings, detonating fuse of core loads between 5 gms. and 80 gms., initiating devices and pyrotechnic products for special applications by space, defence and other agencies. The Division is a major player in the ‘Explobonded’ metal composites required for special applications in chemical industry, space, nuclear and hydrocarbon industry.

The turnover of the Division for the year was Rs. 213.62 crores (Rs.168.31 crores) representing double-digit growth of 12% inspite of the severe shortage of ammonium nitrate, a key raw material. Sales to non-coal sectors improved as a result of high demand for iron-ore, other non-ferrous metals and limestone consuming organisations in the cement / building products industry.

Explosives and accessories manufactured by the Division found better acceptance after the quality / safety CE Certification of all accessories made at the hyderabad Factory was received. Exports increased by 44% to Rs. 26.72 crores (Rs. 18.44 crores).

The Explosives Division along with its R&D has launched two versions of the electronic detonator ‘e-DET’ and field trials of both have been successfully completed and introduced ‘e-Det’ in the PSUs Singareni Collieries, Bharat Coking Coal Limited, besides several private sector organization involved in coal and in limestone mines attached to cement plants. The e-Dets have been highly appreciated in Rail Tunnel projects and for carrying out cautious blasting for a major infrastructure project in the heart of Bhopal city.

Your Company is one of the few leading companies in the World offering clad products under the ‘Explobonded’ (Company’s registered trade mark) for over two decades to the industry and has been recording constant growth every year. The group posted a turnover of Rs.8.02 crores (Rs.7.07 crores) representing a growth of 13%.

The Special Products Group, serving the space and defence sectors, executed several prestigious orders with “six-sigma” specifications. The Group has posted a turnover of Rs. 1.22 crores while several orders from Defence remained in the final stages of processing by the Ministry of Defence and, therefore, could not be executed during the year.

3.3 Mining & Infrastructure (IDLconsult)

The Division’s efforts in aggressively focusing on large mining tenders resulted in the service income of the Division leap frogging 119% to Rs. 141 crores (Rs. 64 crores) The high growth is mainly due to two new 3 year large coal mining contracts being started during the year for Northern Coalfields Limited (NCL), a subsidiary of Coal India Limited.

New projects started during the year include the Nigahi Project under NCL and an iron ore mine of National Mineral Development Corporation (NMDC) in February / March this year.

The Division has successfully continued its mining services at the 6 iron ore mines in the Barbil (Orissa) region and one mine in Karnataka (NMDC). The existing contract with Singareni Collieries Company Limited for Manuguru also progressed as per plan.

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With the high volumes achieved by the Division, it has grown to become the largest Mining Service Provider in the Country in a short span of 6 years. This achievement has been possible due to the excellent mine planning, control and quality systems instituted by the Division over the last 4 years.

Besides total mining services, the Division has taken up a few assignments in the fast growing infrastructure sector. The Division is building on the strengths based on the successful execution of contracts in the Delhi Metro Rail Project, Structural Works at Jamnagar under Reliance and at Outer Ring Road in Hyderabad. The Division has been awarded a large infrastructural contract from the Aditya Birla Group for their new Alumina Project in Orissa.

3.4 Lubricants

The growth of the automotive industry during the year was below expectation. Key segments like commercial vehicles registered a minimal growth of 4 % as compared to 33 % last year. The two wheeler segment saw a negative growth of 8 % vis-à-vis 11 % in 2006-07. Tractor sales for 2007-08 were also lower than last year. The lubricant industry demand was impacted due to the overall slowdown in the automotive industry.

The Lubricants Division, inspite of a minimal growth in the automotive market, increased its turnover by 5% to Rs. 419.83 crores (Rs. 402.06 crores). however, the Division achieved a significant growth in profits due to increase in volumes, improvements in product mix and efficient sourcing of base oils.

The Lubricants Division continued its focus on growing the top-end Diesel Engine Oils and creating a stronghold in the Motorcycle Oil segments to realize higher volumes and achieve significant growth in these segments. The acceptance of the range of ‘Ashok Leyland – Gulf Oil co-branded oils was further consolidated as demand grew for usage of the Gulf Super Fleet LE Max - India’s First Long Drain Engine Oil with a drain interval of 36,000 km. The product portfolio targeted at the commercial vehicle segment was enhanced with the introduction of more grades & packs.

The Division successfully introduced various innovative below-the-line and above-the-line initiatives to achieve excellent growth in the distribution and sales in the Motorcycle segment across India. A new product extension, Gulf Pride 4T Plus – 10W 30 was launched in Q4, backed by a Tv campaign. The Tv campaign is aimed at creating brand awareness for the new product & communicating the ‘Pentatec’ feature advantage to the target audience.

Gulf Filters product line recorded excellent growth as the products gained better customer acceptance with the increased distribution network.

Gulf Car Care Product (CCP) product line was placed in the new retail channels across the country as the Division entered into agreements with the Aditya Birla retail group and Metro Cash & Carry.

3.5 Speciality Chemicals

The operations of the Speciality Chemicals Division which started operations in June 2006 stabilised. The 3 cephalosporins were introduced into the market and were well accepted. The turnover for the year was Rs. 57.51 crores (Rs. 33.57 crores). however, the market prices turned unfavourable for the main product Cefixime Trihydrate and as a result the gross margins were severely affected during a major portion of the year. The market situation is however correcting and expected to normalise.

Enalapril Maleate a cardiovascular drug has received the Certificate of Suitability (COS), from EDQM, France. This would allow the product to be marketed in Europe. The Diviison is now awaiting the COS for its main product Cefixime Trihydrate. The COS is expected within the next few months.

Test marketing for several new molecules have also been done and the results have been encouraging. Exports to China, Europe, Gulf countries have been done during the year. Total export sales were Rs. 5.24 crores for the year.

3.6 Other Business Groups

The 4 Wind Mills ( 1 MW ) located at Ramagiri in Andhra Pradesh generated 2,93,100 units (8,82,700 units). The decrease in the generation was on account of 3 out of the 4 wind mills undergoing a major overhaul during the year. The hyderabad factory received the benefit of the generation through the APTRANSCO grid.

3.7 exports

The Explosives Division exported explosives and accessories to several countries in South East Asia, Gulf and the Middle East totaling Rs. 26.72 crores (Rs. 16.25 crores) representing a record growth of 44% and Explobonded plates to Mexico of Rs. 0.71 crores.

API exports to unregulated markets were Rs. 5.24 crores (Rs. 4.54 crores).

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The Lubricants Division exported value added products of Rs. 15.45 crores (Rs. 18.12 crores) to UAE, Phillippines, Sierra Leone, Middle East and Africa.

3.8 Property Development

The Development of the 2 major properties at Kukatpally, Hyderabad and Yelahanka, Bangalore have progressed satisfactorily.

The Yelahanka project covering approximately 40 acres has been approved by the KIADB for mixed use. Plan for development of IT Park, Office Apartments, Service Apartments as well as Shopping Courts and Commercial areas have been finalized. An eco sensitive design with landscaping as integrated element and parking space for over 8000 cars have been completed by a renowned architects firm. The Company will now be awarding the Development Rights for execution of the projects.

The Hyderabad project has been made possible with the rearrangement of the factory layout thereby releasing approximately 100 acres for immediate development. Suitable applications have been made with the authorities for necessary approvals after meeting all the regulatory requirements. The project would create a large Knowledge City with adequate space for recreation, residential and commercial activities linked to the requirements of the workforce of the Knowledge City. The Company is in the process of selecting architects firm for the planning of the large township along with the Office / Work areas.

4. InTeRnAL COnTROL SYSTeMS

The Company remains committed to ensuring an effective internal control environment that provides assurance on the efficiency of operations and security of assets and has adequate internal control systems commensurate with its size and nature of the business. The audit programme is planned in a manner that over the year all units / offices of the Company are covered by Internal Audit. The Company’s organizational structure with established authority limits, corporate and operational policies, SAP ERP system and reporting mechanisms supports maintenance of robust internal control systems.

The Company has an independent Internal Audit Department and internal controls are evaluated on an ongoing basis by the audit department and the Audit Committee based on reviews at the Audit Committee meetings. The Audit Committee reviews the scope of internal audit activity and the annual audit plans developed to cover all areas of potential risk including information technology and systems security. The Audit Department also reports on the implementation of recommendations which cover all manufacturing, project sites and office locations.

The Audit Committee consisting of all Independent Directors regularly reviews and provides guidance wherever necessary on matters relating to business and operations, financial and corporate compliance including adequacy of internal controls.

5. FIXeD DePOSITS

Fixed Deposits from the public and the shareholders as on 31st March 2008 amounted to Rs. 312.67 lakhs (Rs. 470.79 lakhs). At the end of 31st March 2008, 72 deposits amounting to Rs. 83.85 lakhs (Rs. 96.55 lakhs), which had matured, remained unclaimed. The Company has given intimation to the deposit holders concerned about the maturity of their deposits.

6. TAXATIOn

Orissa Sales Tax

The SLP filed earlier by the Company in the Supreme Court was dismissed and the Company had filed Review Petition before the Supreme Court of India. Pending the Review Petition, the Orissa Sales Tax authorities had issued notices demanding an amount of Rs.4.01 crores as arrears of tax and Rs. 10.72 crores as interest thereon. The Company had filed Writ Petition in the high Court of Orissa against the demand notices. The Supreme Court has since dismissed the Review Petition. Based on legal advice, the Company had withdrawn the Writ Petitions from the Orissa High Court and the said High Court, in the month of April 2008, disposed the Writ Petition as withdrawn. The Company has been advised to file suitable petition in the Supreme Court as the matter involved composite issues/sales tax laws of more than one State. Accordingly, the Company has initiated action in this direction.

Deferred Tax Asset

The auditors in their report have mentioned that they were unable to take a view in the absence of sufficient taxable profit, the appropriateness of carrying deferred tax asset of Rs. 837 lakhs. Management is confident that the Company will make sufficient profits to absorb the deferred tax asset over the next few years.

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7. ReSeARCH & DeveLOPMenT

The R&D of the Explosives Division has launched an economical version of the electronic detonators ‘e-DET ft’ and field trials of both have been successfully completed. The Division has successfully completed trials of electronic detonator in Coal India Limited, the single largest customer of the Division. Commercial production of e-DET has been started and the product was successfully tested in mining & quarrying applications.

The Explosives Division has commercialized small diameter emulsion explosives, developed explosive systems for metal hardening applications and successfully evaluated new explosive systems for achieving high-pull in underground coal mining.

The Speciality Chemicals Division is consolidating its position in the cephalosporins segment. Processes for two cephalosporins have been developed and commercialization is expected in the current year. This will take the number of cephalosporins molecules to six, making the Division a leading player in the cephalosporins antibiotics segment. Work has been initiated on two other molecules. Two more molecules have been short listed for exploration.

The R&D Centre at Silvassa has developed Gulf Pride 4T Plus, premium 4-stroke motorcycle engine oil offering fuel economy benefits meeting JASO (Japanese Automobile Standards Organisation) specifications to meet the requirements of new generation motorcycles, which has enabled the Division to carve a niche in the lubricants market and is expected to take early bird advantage in the current year. The Centre has also developed alternate formulations for various automotive and industrial lubricants. The Centre has specifically developed Gear xP Max, SAE 85W-140, superior performance gear box oil offering extended gear box life for tipper applications in Ashok Leyland vehicles and completed validation of gear / axle oils based on alternate technology. It has developed synthetic gear oils for reputed truck manufacturers and is in the process of developing lubricants for construction equipment.

8. SUBSIDIARIeS

IDL Agro Chemicals Limited incurred a loss of Rs.9.21 lakhs ( loss of Rs. 13.58 lakhs).

IDL Buildware Limited, formerly known as IDL Finance Limited incurred a loss of Rs. 34.45 lakhs. ( loss of Rs. 82.09 lakhs )

Gulf Carassorie Limited incurred a loss of Rs. 0.62 lakhs ( Rs.1.12 lakhs )

Gulf Oil Bangladesh Limited incurred a loss of Rs. 0.77 lakhs ( loss of Rs.13.39 lakhs ).

PT. Gulf Oil Lubricants Indonesia reported a profit of Rs. 1.90 lakhs ( loss of Rs.120.33 lakhs)

Gulf Oil (Yantai) Co. Ltd. incurred a loss of Rs. 194.09 ( Subsidiary from 18.10.2007 ).

9. HUMAn ReSOURCeS / InDUSTRIAL ReLATIOnS

During the year under review, as a part of competency development, various internal and external training programmes were conducted for management personnel. The programmes covered technical areas in each of the Divisions and management development programmes conducted by external consultants. Some of the external programmes included outbound activity to develop team work and bring the “daring spirit” to the participants to help them deal with difficult situations through better team work. Internal programmes included EBIDTA improvement and leadership development issues besides, innovated thinking.

A major focus for the year was the training of all management staff in understanding the SAP Enterprise System. As a result of this internal training over a period of 4 months, the Company was able to change over from legacy ERP Systems to SAP Enterprise System in a period of 6 months. All the 8 modules of SAP have been implemented in 3 Divisions covering 25 locations in a record time of six months thereby linking 3 Divisions effectively in all business processes areas on one standardised platform.

During the year, 17 persons availed VRS from Hyderabad and Rourkela factories. However, production capacity was unaffected through streamlining of manpower, process and also outsourcing of the activities. A tripartite Wage Settlement for 3 years was signed with two unions at Rourkela Works in the presence of the Labour Commissioner, Bhubaneswar, with effect from April 1, 2008.

10. OUTLOOK FOR THe CURRenT YeAR, OPPORTUnITIeS AnD THReATS

The year under review, was a challenging one. At the beginning of the year the outlook for the Indian Economy was very robust. however, towards the second half of the year, the financial markets have undergone turbulence,

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inflation and hike in interest rates. Price of crude oil was buoyant and industrial raw materials were on an upward trend. Yet, the Indian Economy grew at more than 8% and is expected to continue its high growth path for the next 3 years. The drivers of the growth continue to be ‘services’ and ‘manufacturing’ which are expected to grow at more than 9% and 8% respectively. With the positive policy announcements and initiatives of the Union and many State Governments, the agricultural sector is expected to receive a big boost.

The high growth of the economy will bring with it, higher demand for basic industries such as automobiles, cement, steel and other metals, mining, power generation, transportation and other infrastructural facilities. Major divisions of the Company are connected with a majority of these activities.

In this background, the outlook of the activities of our 4 Divisions is expected to be as follows :

10.1 explosives

The growth of explosives industry is dependant mainly on mining and infrastructure sectors. Over 55% of India’s energy requirement is met by coal. With growing demand for power, steel and cement in the coming years, the volume of commercial explosives and blasting accessories is expected to increase significantly.

The 11th Five Year Plan envisages an increase in coal production from 432 million tons to 670 million tons by 2011-2012. Requirement of coal for power generation alone will increase by 180 million tons, from existing 320 million tons to 500 million tons. The demand for coal in 2011-12 throws a formidable challenge to the coal mining industry, which in turn would have to depend heavily on the explosives industry. The Planning Commission feels that special focus on the domestic mining is necessary as requirement of coal may touch 1.7 to 2.0 billion tons in the coming years.

Investment in Infrastructure viz Road, Rail, Air and Water Transport, Power Generation, Transmission, Distribution, Tele-communication, Irrigation and Water Supply is expected to be between 8 to 8.5% of GDP during the 11th Plan Period (2007-2012). This would envisage 50% of total investment in infrastructure alone.

Your Company sees this as a great opportunity for growth and expansion of its business in the coming years. The Company intends to stay focused in its business in order to cover the growing markets in coal mining, non-coal mining and infrastructure sectors.

The Company aims to increase the turnover of its Explosives Division through appropriate automation of processes to increase sale of value-added products such as Electronic Detonators, Non-electric Detonators, boosters based on new generation Emulsion explosive technology, Special products for space and defence application and Metal Cladding operations. Our bulk explosives business has been further expanded in the iron ore segment by entering more areas in the Barbil sector in the state of Orissa. In the manufacturing operations at Hyderabad and Rourkela works, capacity enhancements through de-bottlenecking and rationalization of operations have been undertaken.

10.2 Mining & Infrastructure (IDLconsult)

The Division has Rs 450 crores of orders booked as of April 2008 to be executed in the next two to three years period comprising of Rs.300 crores of coal mining, Rs.100 crores of iron ore mining and Rs.50 crores of construction business.

The Division is targeting large projects in the coal and iron ore sector in the current year. The Division is closely looking for projects relating to irrigation, power generation, mine roads and other infrastructure contracts. The Division’s expertise gained over the last six years would be a major strength in increasing the business in these areas.

The Division foresees good opportunities in the coal sector for mining contracts, as the coal majors like Singareni Collieries and Coal India are planning more offloading of their mining operations, in view of the economics. Many private coal mines are being started over the next two to three years. All these new mine owners are expected to go for contract mining and keep their focus on their main business of power generation or metal processing. The Division looks forward to becoming a major ‘Mine Developer cum Operator’.

10.3 Lubricants Considering the slowdown in the automotive industry last year as compared to 2006-07 and the increased use of

long drain lubricants, growth prospects in the Lubes sector is likely to be limited. It is estimated that the volume growth for lubricants will be 2-3 % in 2008-09 led by higher demand in the car, motorcycle and construction equipment segments.

The Division’s strategy is to consolidate its focus on the heavy duty diesel engine oils and 4-stroke motorcycle oils with initiatives aimed at increasing market share. The Division plans to introduce new products, increase

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penetration of Ashok Leyland-Gulf co-brand oils and continue to work with other OEMs. In the Motorcycle segment, the TV campaign as launched will enhance the brand image; increase the reach and acceptance of the products. The Division also plans to introduce new products to consolidate the portfolio for the car segment. The Division will continue its brand building initiatives through multi media advertising, participation in motor sports, leveraging international tie-ups and local promotional activities.

10.4 Speciality Chemicals

India is becoming a leading player in the global pharma industry, alongwith China. A study conducted by the ASSOCHAM indicates that the domestic Pharma industry is poised to accelerate at 13-14 % between 2006 and 2010 against a current CAGR of 9.5 %. The pharma industry has more than 20,000 formulation facilities operating as job workers for domestic and overseas manufacturers. These formulators form a major customer base in India.

The manufacturing facility of the Division has been audited by a few of the large overseas customers and representatives of customers and large traders.

The Division plans to be a major player in the cephalosporins antibiotic segment, which has a high growth potential. The advanced cephalosporins are attractive molecules. Work is on hand to develop processes for some of these advanced molecules. The Company has plans to introduce newer cardiovascular and lipid lowering drugs in the near future. The Division has made its presence in the semi regulated and less regulated markets like Mexico, Turkey, China, Singapore, Hongkong, Pakistan and a few other countries in the Gulf and South East Asia.

The Division has started marketing formulations in the east / north east and in the south of India. The reception to the products has been encouraging. More formulations would be added in the near future. The Division also plans to introduce injectable cephalosporins in the next phase and enter the institutional segment.

11. RISKS AnD COnCeRnS

11.1 environmental Risks

Safety and environment is integral to the business performance of your Company and receives continuous attention throughout the year. Safety audits are carried out by internal safety audit teams and at regular intervals by external teams. General Safety Directions ( GSDs ) are strictly enforced in all factories and plants within the factories to ensure minimisation of risk. During the year, a special safety audit has been carried out by consultants specialising in Explosives units at the hyderabad Factory. All recommendations have been implemented and confirmed by the Consultants.

In addition, strict compliance of the requirements of the Explosives Act and Rules are ensured to protect the exposure of adjacent neighbourhoods of the explosives and accessories factory from undue risk. There were zero reportable accidents in the Explosives, Lubricants and Speciality Chemicals factories during the year. Operations are carried out to ensure fulfillment of emission, waste water and waste disposal norms of the local authorities of the respective factories.

The Explosives and API facilities have obtained Hazardous Waste authorization from the State Pollution Control Board. The API factory has arrangements with a common effluent treatment plant to discharge pretreated effluent and has also arrangements with an authorized agent for disposal by incineration and land fill. At all factories the emissions from boiler and generator stacks are monitored regularly to comply with the limits set by the State Pollution Control Board.

11.2 Operational Risk

Raw Materials

Due to the volatility of crude and gas prices in the global markets, the availability of two key raw materials namely Base Oils and Ammonium Nitrate was affected. Sourcing was difficult at prices necessary for competitive pricing of the finished products. The situation is expected to continue in future. The Company has therefore, planned to carry adequate safety stocks to maintain continuous plant operations. The Company seeks to mitigate the risk by entering into long-term relationships with global raw material suppliers, with suitable escalation clauses to ensure regular supplies.

11.3 Market Risks:

Markets

All the Divisions of the Company operate in highly competitive markets where competition from all India players as well as regional players is high. Of which, two major divisions, namely Industrial Explosives and IDLconsult Divisions

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operate in tender-driven markets, sometimes with onerous and unreasonable performance clauses. Therefore, there is a risk of cost increases, especially of petro product inputs, not possible to be passed on to ultimate consumers. Any further slowdown in the automobile industry and deceleration in manufacturing industry is likely to have an adverse impact on the lube industry. In order to minimise adverse impact the Lubes Division is taking several marketing initiatives.

During the last quarter of previous year base oil prices have seen significant increases on account of growing demand and lower availability. Given this trend of increasing base oils prices, if the cost increases cannot be passed on fully or recovered from the consumer, we may see an erosion of margins across the industry. Also increased competition levels from the market leader to retain volumes and new entrants may lead to aggressive pricing and discounts.

The IDLconsult Division which currently undertakes mining services in coal, iron ore and limestone sectors, is exposed to business risks on account of non-availability of environmental clearances in time and lack of adequate infrastructure for dispatch of ores from the mine, especially during the rainy seasons. In view of this, detailed review of approvals and quality of infrastructure is carried out before undertaking mining service contracts.

The API business may be indirectly affected by Government policy on price control of certain types of drugs from time to time. Suitable action in this regard is generally undertaken through the drug manufacturers associations and similar bodies.

Both the Explosives and Contract Divisions are operating in the mining and infrastructure sectors, dominated by the PSUs, where the tendering system is in vogue, with the attendant risks. Missing L1 status in these tenders might result in loss of business opportunities.

11.4 Financial Risks:

Currency value and Interest Rate Fluctuations

Policies for overall foreign exchange loss risks and liquidity are regularly reviewed based on emerging trends. Interests’ risks arising out of financial debt, are normally done at fixed rates or linked to LIBOR and appropriate Bank lending rates. Action on all exposures are taken based on policies approved by the Board.

Credit Risk

The Company sells its products through the customary trade channels, with the attendant risk of payment delays and defaults. To mitigate the risk, Division wise credit risk policies ensure that sale of products are made to customers after evaluation of their ability to meet financial commitments through allotment of specific credit limits to respective customers.

Liquidity Risk

Liquidity conditions in the money market and the hardening of interest rates may impact the capability of distribution channel of the Lubes Division to support growth in business. Steps are being taken up for tie –up with financing partners to support distributors.

All the four Divisions operate in working capital intensive industries. The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and Corporate Finance.

11.5 Legal and Statutory Risks:

All major contracts are reviewed / vetted by the in-house legal department before the same are executed. In addition, the Company engages the services of reputed independent legal counsels, on need basis.

The Company is required to institute and defend several legal cases connected with and incidental to its businesses. These include civil cases, sales tax cases, labour cases, etc. Outcome of these cases could affect the profits. The Company is conducting these cases with professional legal advice and believes that these submissions are sound.

However, in matters of tax law and other statutory obligations the outcome of litigation cannot always be predicted. hence, appropriate financial provisions, insurance policies and credit lines are taken to limit the risk for the Company.

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11.6 IT Risks

The Company is operating in several intra-office and inter-office networks for several business softwares. During the year all servers handling distributor processing were centralized at the Corporate Office and SAP Enterprise Software was introduced into 3 of the Divisions based at Hyderabad. In view of the large networks of the Company across various locations in India, the centralized servers were fully backed by standbys and continuous clear power ensured to the Central Servers. These actions have ensured the liability of the networks and SAP modules being operated from various locations and consequential loss of business minimised. Regular backup systems have also been instituted for all computers and laptops operating at various locations in the Company, besides, set up of suitable firewalls and virus protection systems.

11.7 Other Risks

various assets of the Company including plant and machinery, stocks, buildings, furniture, office equipment and computer systems could suffer damages / loss owing to occurrences like fire, accidental mishaps, etc. The Company has taken insurance covers to protect these assets from possible damage / loss.

12. DIReCTORS

Mr.P.N.Ghatalia, Mr.V.Ramesh Rao, Ms.Vinoo S Hinduja and Mr.M.S.Ramachandran in accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, retire by rotation at the 47th Annual General Meeting of the Company and are eligible for reappointment.

Profile of members of the Board of Directors being appointed / reappointed :

P.n.Ghatalia

P.N.Ghatalia retired as a Senior Partner in Price Waterhouse with vast experience in the professional field. he was also an active member in Board of Societe Generale, Member of the Board of Advisory Committee of Priyadarshni Academy Award, Member of Board of various District Committees and a Member of the Accounting Standards Committee of the Securities and Exchange Board of India (SEBI).

v.Ramesh Rao

Mr.V.Ramesh Rao is a postgraduate in Mechanical Engineering with specialization in Industrial Tribology from IIT, Madras and is a President’s Gold Medalist. He has been working in the lubricants industry since 1984 in various companies such as Lubrizol India Limited, Gulf Lubricants Systems and in Gulf Oil International companies in China, Korea, Taiwan and Philippines. He is a member of the Gulf Oil Core Technical Team and assisted Gulf Oil’s international operations and handles the operations in the Asia Pacific Region.

vinoo S. Hinduja

Vinoo S Hinduja is a degreeholder in Business Administration from UK and a Diploma holder in Health Policy Management from USA. She has completed her internship and training in Finance and Banking at the Credit Suissee Bank, Geneva and Chase Manhattan Bank, London and in hospital administration and management from Cromwell hospital, London. She is also a member of the National health and Education Society, hinduja National Hospital in Mumbai.

M.S.Ramachandran

M.S.Ramachandran is a Bachelor in Mechanical Engineering. He has vast knowledge and experience of Oil and Gas industry. he was Chairman of Indian Oil Corporation Limited, Chennai Petroleum Corporation Limited, IBP Co. Ltd., Bongaigaon Refineries & Petrochemicals Ltd., Indian Oil Tanking Ltd., Indian Oil Petronas and Director, ONGC Ltd., Petronet LNG Ltd. he has received several awards including Chemtech Pharma Bio hall.

Names of companies in which the Directors, seeking appointed/reappointed at the ensuing AGM, hold positions of directorship and the membership/chairmanship of committees of the Board, are as per the Annexure to the Report on Corporate Governance.

13. STATUTORY InFORMATIOn

Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo 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 and the Statement under Section 217(2A) of the Companies Act, 1956 read with Companies ( Particulars of Employees ) Rules, 1975 as amended, are annexed to this full Report. However, as per the provisions of Sec.219 (1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company.

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14. InFORMATIOn On STOCK eXCHAnGeS

The Equity shares of the Company are listed on Bombay Stock Exchange Limited and got listed during the year on the National Stock Exchange of India Limited. The Company has applied for Delisting from the hyderabad Stock Exchange Ltd (hSE)., and the said hSE has since been derecognised by the Securities and Exchange Board of India (SEBI).

15. CORPORATe GOveRnAnCe

A detailed report on the subject forms part of this report. The Statutory Auditors of the Company have examined the Company’s compliance and have certified the same as required under the SEBI Guidelines. Such certificate is reproduced in this report.

16. DIReCTORS’ ReSPOnSIBILITY STATeMenT

The Directors, on the basis of informative documents made available to them, confirm that:

a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

b. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

c. They have taken proper and sufficient care for the maintenance of the 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.

17. SUBSIDIARY COMPAnIeS

The Report and Accounts of the Subsidiary Companies are annexed to this Report along with the statement pursuant to Section 212 of the Companies Act, 1956. However, in the context of mandatory requirement to present consolidated position of the Company including subsidiaries, at the first instance, members are being provided with the Report and Accounts of the Company treating these as abridged accounts as contemplated by Section 219 of the Companies Act, 1956. Members desirous of receiving the full Report and Accounts of the subsidiaries will be provided the same on receipt of a written request from them.

18. AUDITORS

M/s Deloitte Haskins & Sells and M/s Shah & Co., Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received confirmation that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

ACKnOWLeDGeMenTS

Your Directors take this opportunity to thank the customers, vendors, business partners, shareholders, bankers and other stakeholders for their faith reposed in the Company and thank the Government of India, State Governments and regulatory authorities and agencies for their support and look forward to their continued encouragement. Your Directors place on record their sincere appreciation of the contribution of all employees which has enabled the growth of the Company’s business in very competitive market conditions and for taking advantage of emerging opportunities.

For and on behalf of the Board of Directors

Place : Mumbai S.G.HINDUJADate : May 24, 2008 Chairman

CAUTIONARY STATEMENTStatement in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include global and Indian demand supply conditions, finished goods prices, raw material availability and prices, cyclical demand and pricing in the Company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts businesses and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.

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RePORT On CORPORATe GOveRnAnCe

1. COMPAnY’S PHILOSOPHY On CORPORATe GOveRnAnCe The Company will continue to be in the forefront of its diverse interests and sustain growth activities through emphasis

on TQM, adoption of emerging technologies, innovation through research, good corporate governance, adherence to fair business practices and effective use of physical, technological, R & D, information and financial resources, thus fulfilling the aspirations of customers, shareholders, employees and financiers.

2. BOARD OF DIReCTORS (A) Composition: The Board of Directors of the company headed by a Non-Executive Chairman consists of the

following Directors as on 31st March, 2008 categorised as indicated below :

(i) Chairman (non-executive) Mr. Sanjay G Hinduja

(ii) non-executive Directors:

(a) Promoter Group: Mr. Sanjay G Hinduja Mr. Ramkrishan P HindujaMs. Vinoo S Hinduja Mr. Alain V DujeanMr. V.Ramesh RaoMr. Vinod K DasariMr. Abin K.Das, Alternate Director to Mr. Sanjay G Hinduja Mr. Camille A Nehme, Alternate Director to Mr. Alain V DujeanMr. Prabal Banerjee*, Alternate Director to Ms. Vinoo S Hinduja

(b) Independent: Mr. K N Venkatasubramanian Mr. Pravin N GhataliaMr. H C Asher Mr. M.S.RamachandranMr. Ashok Kini

(iii) Managing Director: Mr. Subhas Pramanik

(B) Attendance of each director at the Board Meetings and the last AGM and details of membership of Directors in other Boards and Board Committees:

Name of the Director

No. of Board

Meetings Attended

Whether attended

last AGM

No. of Memberships of other Boardsas on 31/03/08

(includes private companies)

No. of Memberships

of other Committees

No. of Chairmanship

in other Committees

Sanjay G Hinduja 4 Yes 5 - -K N Venkatasubramanian 5 Yes 10 3 4Hemraj C Asher 6 Yes 22 5 3A K Das 3 No 26 4 -Alain Vincent Dujean 5 Yes - - -Pravin N Ghatalia 7 Yes 9 4 4Ramkrishan P Hinduja 2 Yes 8 2 -S Pramanik 7 Yes 4 - -V Ramesh Rao 4 Yes 3 - -Vinoo S Hinduja 1 No 2 - -M.S.Ramachandran 5 Yes 2 - -Ashok Kini 5 Yes 3 2 1Vinod K Dasari 5 Yes 3 - -Camille A Nehme 1 Yes - - -Prabal Banerjee* 3 Yes 4 - -

* effective 28th September, 2007

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(C) Brief profiles of the Directors being appointed/reappointed have been given in the Directors’ Report.

(D) Details of Board Meetings held during the Year 2007 – 2008:

Date of the Meeting Board Strength no. of Directors Present25.05.2007 12 915.06.2007 12 424.07.2007 12 1117.08.2007 12 428.09.2007 12 1225.10.2007 12 1130.01.2008 12 11

(E) Code of Conduct

The Board of Directors has laid down Code of Conduct for all Board Members and Senior Management of the Company. The text of the Code of Conduct is uploaded on the website of the Company – www.gulfoilcorp.com. The Directors and Senior Management personnel have affirmed compliance with the Code applicable to them during the year ended March 31, 2008. The Annual Report of the Company contains a Certificate duly signed by the Managing Director in this regard.

(F) CEO & CFO Certification

The Managing Director and the Chief Financial Officer have certified to the Board of Directors of the Company that:

(a) They have reviewed the financial statements and the cash flow statement for the year and that to the best of their knowledge and belief:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.

(ii) These statements together present a true and fair view of the Company’s affairs, and are in compliance with the existing accounting standards, applicable laws and regulations.

(b) There are, to the best of their knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct.

(c) They accept responsibility for establishing and maintaining internal controls for financial reporting and that they have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting; and that they have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

(d) They have indicated to the Auditors and the Audit Committee:

(i) significant changes in internal control over financial reporting during the year;

(ii) significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

(iii) instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting.

(G) Shares held by non- executive Directors

Mr H C Asher held 3750 (of Rs. 2/- each) equity shares of the Company as on 31.03.2008 and none of the other non-executive Directors holds any shares in the Company.

3. AUDIT COMMITTee The Audit Committee was constituted in February 1987. The current terms of reference are in full conformity with the

requirements of Section 292A of the Companies Act, 1956.

Composition

Chairman: Mr. Pravin N Ghatalia

Members: Mr. Hemraj C Asher

Mr Ashok Kini

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Meetings and Attendance:

Audit Committee Meetings held during the year 2007 – 08 and attendance details:

Date of the Meeting Committee Strength no. of Directors present

24.05.2007 3 2

24.07.2007 3 3

25.10.2007 3 3

19.12.2007 3 3

30.01.2008 3 3

25.03.2008 3 3

Company Secretary / Deputy Company Secretary / Assistant Company Secretary of the Company is the Secretary to the Committee.

Mr. S Pramanik, Managing Director was invitee for all the Audit Committee Meetings. Chief Financial Officer / vice President (Finance) and Senior General Manager (Internal Audit) attended all the meetings.

The Statutory Auditors of the Company were invited to join the Audit Committee in all the meetings for discussing the quarterly unaudited financial results and the Annual Audited Accounts before placing it to the Board of Directors. The Audit Committee held discussions with the Statutory Auditors on the yearly Audit Plan, matters relating to compliance of Accounting Standards, their observations arising from the annual audit of the Company’s Accounts and other related matters.

4. SUBSIDIARIeS

There are no material non-listed Indian subsidiaries of the Company.

5. ReMUneRATIOn COMMITTee

The terms of reference are, review of the compensation policy for the Executive Directors. Accordingly, they are authorised to negotiate, finalise and approve the remuneration for Managing Director/ Whole-time Directors on behalf of the Company.

Composition Chairman: Mr.Pravin N Ghatalia Member: Mr.H C Asher Ms.Vinoo S Hinduja Mr. M. S. Ramachandran (w.e.f. 24.05.2008) Meetings and Attendance

Date of the Meeting Committee Strength no. of Directors present

24.07.2007 2 2

Remuneration policy

i) For Managing Director

The total remuneration subject to shareholders approval consists of:

- a fixed component – consisting of salary and perquisites

- a variable component by way of commission as determined by the Board within the limits approved by the shareholders.

ii) (a) For non– executive Directors

An amount of Rs. 20,000/- for each Board Meeting, Audit Committee Meeting and Meeting of the Committee of Directors, and Rs.5,000/- for each Remuneration Committee and Rs. 2,000/- for each Share Transfer Committee Meeting and Rs.12,000/- for each meeting of the Organisational Development Committee plus reimbursement of actual travel and incidental expenditure not exceeding Rs.2,000/- is paid (as per the provisions of Section 309, 310 of the Companies Act, 1956).

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non-executive Directors (Sitting Fees only) Rs. in lakhs

Mr. Sanjay G. Hinduja 1.20

Mr. Ramkrishan P. Hinduja 0.40

Mr. K N Venkatasubramanian 1.60

Mr. Pravin N. Ghatalia 3.25

Mr. H C Asher 3.85 #

Mr. Alain V. Dujean 1.00

Ms. Vinoo S Hinduja 0.20

Mr. Abin K. Das 0.80

Mr.M.S.Ramachandran 1.42

Mr.V.Ramesh Rao 0.80

Mr Ashok Kini 2.58

Mr Vinod K Dasari 1.08

Mr Camille A Nehme 0.00

Mr. Prabal Banerjee ## 1.00

Total 19.18

# out of Rs. 3.85 lakhs, an amount of Rs. 1.60 lakhs pertains to the meetings held in the previous financial year.

## appointed as Alternate Director effective 28th September, 2007

(b) For executive Directors (Rs. in lakhs)

Managing Director

Salaries 34.53

Commission 2.62

Contribution to Provident Fund and Superannuation Fund 5.83

Benefits 2.28

Total 45.26

Having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an individual employee is not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in the above computation.

Managing Director is under contract of employment with the company with 6 months’ notice period from either side. There is no severance fee payable to the Executive Directors. The Company does not have any stock option scheme.

6. SHAReHOLDeRS / InveSTORS GRIevAnCe COMMITTee

Composition : 3 Directors

Chairman : Mr. Ashok Kini # M S Ramachandran ## Members : Mr. S Pramanik Mr. Vinod K Dasari

# effective from 25.10.2007

## upto 25.10.2007

The Shareholders / Investors Grievance Committee specifically looks into redressing of shareholders/ investors complaints in matters such as transfer of shares, non-receipt of declared dividends and ensure expeditious share transfer process.

Number of Shareholders Complaints received so far : 108

Not solved to the satisfaction of the shareholders : NIL

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7. GeneRAL BODY MeeTInGS

Location, time and venue where last three AGMs held

Financial Year Location of AGM Date & Time of AGM

2006 - 07 Emerald – 1, hotel Taj Krishna, Banjara hills, hyderabad 28.09.2007, 2.30 p. m.

2005 - 06 ‘Kohinoor’, Hotel Taj Residency, Banjara Hills, Hyderabad 27.09.2006, 2.30 p. m.

2004 - 05 Convention Centre, Hotel Viceroy, Tank Bund Road, Hyderabad 01.08.2005, 10.30 a. m.

Special Resolutions Special resolutions were passed at the annual general meetings as under:

i) AGM held on 1st August 2005 – 5 Special resolutions

ii) AGM held on 27th September 2006 – 1 Special resolution

iii) AGM held on 28th September 2007 – 5 Special resolutions

No Special resolution that requires approval through postal ballot was passed in the previous year. No Special resolution which requires approval through postal ballot is proposed to be conducted at the ensuing AGM.

8. DISCLOSUReS

Related Parties

There were no materially significant related party transactions which may have potential conflict with the interests of the Company at large. Confirmation has been placed before the Audit Committee and the Board that all related party transactions during the year under reference were in the ordinary course of business and on arm’s length basis. Transactions with related parties are disclosed in Note.19 of the Schedule 18 to the Accounts in the Annual Report.

BOARD DISCLOSUReS - Risk Management

The Company has laid down procedures to inform the Board of the Directors about the Risk Management and its minimization procedures. The Audit Committee and the Board of Directors review these procedures periodically.

9. STRICTUReS AnD PenALTIeS

There were no strictures or penalties imposed on the Company by either Stock Exchanges or SEBI or any Statutory Authority for non-Compliance on any matter related to Capital Market during the last three years.

10. MeAnS OF COMMUnICATIOn

The quarterly and half yearly reports, are normally published in the Economic Times / Business Standard in two centers – Mumbai and hyderabad, in the local newspaper – Andhra Prabha / Andhra Bhoomi and are displayed on the Website of the Company www.gulfoilcorp.com. During the year no presentations were made to institutional investors or to the analysts.

The Management Discussion and Analysis Report forms part of the Directors’ Report.

11. GeneRAL SHAReHOLDeRS InFORMATIOn

Annual General Meeting : Date - 25th September, 2008 Venue - Hotel Taj Krishna, Banjara Hills, Hyderabad-34 Time - 2.30 p.m.

Financial Calendar :

- Unaudited results for 1st quarter of next Financial Year – by 31.07.2008

- Unaudited results for 2nd quarter of next Financial Year – by 31.10.2008

- Unaudited results for 3rd quarter of next Financial Year – by 31.01.2009

- Audited results for next Financial Year – by 30.06.2009

Date of Book Closure – 16th September, 2008 to 25th September, 2008

Date of Dividend Payment – 4th October, 2008

Listing of Equity Shares – Bombay Stock Exchange Limited – Code 506480

National Stock Exchange of India Ltd – Code GULFOILCOR

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Market Price Data (in Rupees) in respect of the Company’s shares on BSE, monthly high and low during the last Financial Year

Month & Year High (Rs.) Low (Rs.)April, 2007 1085.00 818.00May, 2007 1025.00 877.20June, 2007 1394.30 841.10July, 2007 1318.40 900.00August, 2007 1000.00 841.00September, 2007 1567.00 976.00October, 2007 1865.00 328.90*November, 2007 349.95* 258.80December, 2007 362.40 265.00January, 2008 387.00 173.25February, 2008 214.75 151.55March, 2008 163.15 93.10

Note : Face value of 1 equity share of Rs. 10 each, was split into 5 shares of Rs. 2 each, from 2nd November, 2007. However, share price on the graph is consolidated into 5 shares, for uniform depiction.

Distribution of Shareholding as on 31.03.2008

Paid up Share CapitalShareholders no. of Shares

no. % no. %Up to 5000 55590 98.88 5557356 7.475001 – 10000 322 0.57 1195637 1.6110001 – 20000 145 0.26 1042002 1.4020001 – 30000 46 0.08 574728 0.7730001 – 40000 21 0.04 374080 0.5040001 – 50000 26 0.05 594539 0.8050001 – 100000 17 0.03 688111 0.93100001 and above 51 0.09 64332282 86.52

Total 56218 100.00 74358735 100.00

Pattern of Shareholding as on 31.03.2008

Category no. of Holders no. of Shares % of Share HoldingPromoters 1 34004900 45.73Public :Institutional Investors: Mutual Funds & UTI, Banks, Financial Institutions & Others 10 4863193 6.54 Private Corporate Bodies 868 16728013 22.50Indian Public 55140 11140174 14.98NRIs/ OCBs 192 4206813 5.66FIIs 7 3415642 4.59GRAnD TOTAL 56218 74358735 100.00

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Dematerialisation of shares and liquidity – 71650640 shares were dematerialized amounting to 96.36% of the total paid up capital. Shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited and frequently traded on both the Exchanges.

Details of Share Transfer System:

The authority relating to approval of share transfers has been delegated to the Share Transfer Committee consisting of Mr. Ashok Kini, Chairman (Mr. M S Ramachandran till 25.10.2007), Mr. S Pramanik and Mr. Vinod K Dasari. The Committee has met four times during the year for approving transfers, transmissions, etc. Operations with regard to dematerialization are being complied with, in conformity with the regulations prescribed.

The name and designation of Compliance Officer : Mr. S Subramanian, CFO & Company Secretary

The Registrar and Share Transfer Agents are handling all the share transfers and related transactions.

As on March 31, 2008, there were no requests pending for demats / overdue beyond the due dates.

Plant Locations:

A. explosives : Explosives Division, Hyderabad, APExplosives Division, Rourkela, Orissa

B. Lubricants : Lubes Division, Silvassa

C. Speciality Chemicals : Pashamylaram, Hyderabad

Details of Addresses for Correspondence:

Registered Office GULF OIL Corporation LimitedKukatpally, Sanathnagar (IE) POHYDERABAD 500 018Ph – 91 40 2381 0671 – 79Fax – 91 40 2381 3860E-mail : [email protected]

Registrar and Share Transfer Agents M/s. Sathguru Management ConsultantsPrivate Limited Plot No. 15, Hindi Nagar Behind Saibaba TemplePanjaguttaHyderabad 500 034Ph – 91 40 2335 6507/ 6975Fax – 91 40 4004 [email protected]

ISIn for the equity Shares IN E 077F01027

Dividend for the last three years 2007 – 08: 75%2006 – 07: 75%2005 – 06: 70%

12. nOn MAnDATORY ReQUIReMenTS

The Board has constituted a Remuneration Committee and the terms of reference of this Committee are given in para 5 above.

Whistle Blower Policy

The Company is in the process of establishing a structured mechanism for employees to report to the management, concerns about unethical behaviour or violation of the Code of Conduct.

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AnneXURe

DIReCTORSHIPS In OTHeR COMPAnIeS

List of outside Company Directorships:

Pravin n Ghatalia v Ramesh Rao vinoo S Hinduja Mr. M.S. Ramachandran

Ashok Leyland Ltd1.

Ennore Foundries Ltd 2.

Star Paper Mills Ltd 3.

Reliance Infratel Ltd 4.

Kamat Hotels (India)5. Ltd

SI Group India Ltd6.

Cinemax India Ltd7.

Foseco India Ltd8.

Vista Entertainment 9. Pvt Ltd

Jaykamal Coco Care 1. Pvt Ltd

Jaykamal Consultancy 2. Services Pvt Ltd

GULF Ashley Motors 3. Ltd

hinduja ventures Ltd 1. (formerly Hinduja TMT Limited)

Hinduja Group India 2. Ltd

Supreme Petro 1. Chemicals Ltd.

Chairman of the Board of Directors of other Companies

- - - Cals Ltd.1.

Chairman/Member of the Committees of Directors of other Companies in which he/she is a Director

Audit Committeea) Ashok Leyland Ltd1.

Ennore Foundries Ltd 2.

Kamat Hotels ( India) 3. Ltd

SI Group India Ltd4.

Cinemax India Ltd5.

Foseco India Ltd6.

Reliance Infratel Ltd7.

b) Investors/ Shareholders Grievance Committee

Reliance Infratel Ltd1.

c) Other Committee

-

-

-

-

-

-

-

-

-

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DeCLARATIOn On CODe OF COnDUCT

This is to confirm that the Board has laid down a Code of Conduct for all Board Members and senior management personnel of the Company. The code of conduct has also been posted on the website of the Company. It is further confirmed that all Directors and Senior Management personnel of the company have affirmed compliance with the Code of Conduct of the Company for the financial year ended on March 31, 2008, as envisaged in Clause 49 of the Listing Agreement with stock exchanges.

Place : Hyderabad S. PRAMANIKDate : May 19, 2008 Managing Director

AUDITORS’ CeRTIFICATe

To the Members of GULF OIL Corporation Limited

1. We have examined the compliance of conditions of Corporate Governance by GULF OIL Corporation Limited for the year ended 31st March, 2008 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges.

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

3. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with conditions of the Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

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

For Deloitte Haskins & Sells,

Chartered Accountants

K. RAJASEKHARPlace : Mumbai PartnerDate : May 24, 2008 M.no. 23341

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AUDITORS’ RePORT

To the Members of GULF OIL Corporation Limited

1. We have audited the attached Balance Sheet of GULF OIL Corporation Limited (“the Company”) as at 31st March, 2008 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, both annexed thereto in which are incorporated the returns from the Lubricants branch audited by another auditor. 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 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. As required by the Companies (Auditor’s Report) Order, 2003 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 paragraph 4 and 5 of the said Order, to the extent applicable.

4. Deferred tax asset (Note 17(ii) of Schedule 18) includes Rs. 837 lakhs on account of carried forward business losses for reasons explained therein and in respect of which we are unable to form a view on the appropriateness of the same.

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

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

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branch not visited by us.

(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 and the audited returns from the Lubricants branch.

(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) in our opinion and to the best of our information and according to the explanations given to us, except for our comments in para 4 above, the said accounts give the information required by the Companies Act, 1956 in the manner so required give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

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

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

6. On the basis of written representations received from the directors as on 31st March 2008, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For Deloitte Haskins & SellsChartered Accountants

Place : MumbaiDate : May 24, 2008

K. RAJASEKHAR Partner

M.no. 23341

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AnneXURe TO THe AUDITORS’ RePORT TO THe MeMBeRS OF GULF OIL CORPORATIOn LIMITeD On THe ACCOUnTS FOR THe YeAR enDeD 31ST MARCH, 2008

The nature of the Company’s business activities during the year was such that paragraphs 4(xii), (xiii), (iv) and (xix) of the Companies (Auditor’s Report) Order, 2003 are not applicable.

(i) In respect of its fixed assets:

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

(b) In accordance with the phased programme of verification adopted by the Company, physical verification of assets at some locations has been carried out during the year by the management. According to the information and explanations given to us, no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable.

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

(ii) In respect of its inventories:

(a) As explained to us, inventory were physically verified during the year by the management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventory. The discrepancies noticed on verification between the physical stocks and book records were not material.

(iii) According to the information and explanations given to us, the Company has not granted / taken any loans, secured or unsecured to or from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (b), (c), (d), (e), (f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and 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 we have been informed of any instance of major weakness in the aforesaid internal control system.

(v) As explained to us and according to the information and explanations given to us, there are no transactions that need to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956. Accordingly para 4v(b) of the Order is not applicable.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A, 58 AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under as applicable. As explained to us, the Company has not received any order from the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any other Tribunal.

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

(viii) We have broadly reviewed the books of accounts maintained by the Company in respect of manufacture of lubricants, bulk drugs and formulations pursuant to the Rules made by the Central Government of India for the maintenance of cost records has been prescribed under section 209 (1) (d) of the Companies Act, 1956, and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information given to us, the Central Government has not prescribed the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any other product of the Company.

(ix) In respect of statutory dues:

(a) According to the information and explanations given to us the Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(b) According to the information and explanations given to us, as at 31st March, 2008, the following are the particulars of dues on account of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute;–

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name of the Statute nature of dues Period to which the amount relates

Amount(Rs lakhs)

Forum where dispute is pending

Lubricants

Sales Tax Act Sales Tax 1999-2000, 2000-01 &2003-04

19.33Additional Commissioner Commercial Taxes

1994-95 & 1999-00 318.21 High court

Central Excise Act Excise duty 1997-98 13.65 Appellate Tribunal

2006-07 439.75 Commissioner (Appeals)

Others

Central Excise Act Excise duty 1980-87 6.12 Asst. Commissioner Central Excise & Customs

1992-96 1.11 Commissioner Appeals, Central Excise & Customs

Sales Tax Act Sales tax 1992-93, 1994-95, 1995- 96, & 1998-99

2,591.86 Sales Tax Appellate Tribunal

2001-02 5.70 Commercial Tax Officer

1997-98, 2003-04 & 2004-05

243.80 Asst. CommissionerCommercial Taxes

1984-85 & 1987-88 1,141.14 High Court, Orissa

Income Tax Act, 1961

Income-Tax 1998-99 to 2000-01 32.97 Commissioner (Appeals)

Income tax 2001-02 10.27 Income tax Appellate Tribunal

(x) The Company does not have accumulated losses as at 31st March, 2008 and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of its dues to financial institutions or banks during the year.

(xii) In our opinion, the terms and conditions on which the Company has given guarantees for loans taken by others from bank or financial institutions are prima facie not prejudicial to the interest of the Company.

(xiii) To the best of our knowledge and according to the information and explanations given to us, in our opinion, the term loans availed by the Company were applied for the purpose for which they were obtained.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short term basis have not been used for long term investment.

(xv) The Company has not made any preferential allotment of shares to parties covered under section 301 of the Companies Act, 1956.

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

(xvii) According to the information and explanations given to us, during the year, no fraud on or by the Company was noticed or reported.

For Deloitte Haskins & Sells

Chartered Accountants


K. RAJASEKHARPartner

M.no. 23341

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As at As at31st March 2008 31st March 2007

Schedule (Rupees Lakhs) (Rupees Lakhs)

I. SOURCeS OF FUnDS1. Shareholders' Funds

(a) Capital 1 1487.17 1387.17 (b) Warrants Convertible to Equity Shares 1A 505.00 (c) Reserves & Surplus 2 203901.39 14388.71

205388.56 16280.88

2. Loan Funds(a) Secured Loans 3 13457.72 15547.27 (b) Unsecured Loans 4 11163.40 6251.04

24621.12 21798.31

TOTAL 230009.68 38079.19

II. APPLICATIOn OF FUnDS1. Fixed Assets

(a) Gross Block 208902.53 23643.35 (b) Less : Depreciation 9930.55 8416.48 (c) Net Block 5 198971.98 15226.87 (d) Capital Work-in-Progress and

advances on Capital Account 1452.34 420.27 200424.32 15647.14

2. Investments 6 5852.08 6701.94 3. Deferred Tax Asset (net) 469.47 234.48 4. Current Assets, Loans and Advances

(a) Inventories 7 11511.59 10724.81 (b) Sundry Debtors 8 16301.85 14875.88 (c) Cash and Bank Balances 9 3778.80 3210.21 (d) Loans and Advances 10 7302.73 4977.75

38894.97 33788.65 Less: Current Liabilities and Provisions(a) Current Liabilities 11 13766.04 17523.19 (b) Provisions 12 2536.50 1813.65

16302.54 19336.84 Net Current Assets 22592.43 14451.81

5. Miscellaneous expenditure 13 671.38 1043.82 (to the extent not written off or adjusted)TOTAL 230009.68 38079.19 notes on the Accounts 18

BALAnCe SHeeT AS AT 31ST MARCH, 2008

Schedules 1 to 18 annexed hereto form part of these accounts.

Per our report attached For Deloitte Haskins & Sells For and behalf of the Board of DirectorsChartered Accountants

K. RAJASEKHAR S. SUBRAMANIAN S. PRAMANIK S. G. HINDUJAPartner

Chief Financial Officer & Company Secretary

Managing Director Chairman


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PROFIT & LOSS ACCOUnT FOR THe YeAR enDeD 31ST MARCH, 2008

Year ended Year ended31st March 2008 31st March 2007

Schedule Rupees Lakhs Rupees Lakhs

InCOMeIncome from sales and other operations 83321.52 66865.64 Less: Excise duty 8605.23 6730.81

74716.29 60134.83 Income from Property Development 600.00 3337.00 Other Income 14 3312.60 317.99

78628.89 63789.82 eXPenDITURe

Cost of Materials 15 39236.49 36312.97 Expenses 16 34325.76 22829.02 Depreciation 1602.27 1002.14

75164.52 60144.13 PROFIT BeFORe eXCePTIOnAL ITeMS AnD TAXATIOn 3464.37 3645.69 Exceptional Item : Compensation under Voluntary Retirement Scheme 493.77 462.32

PROFIT BeFORe TAXATIOn 2970.60 3183.37 Provision for Taxation

Current Tax 350.00 354.00 Tax Provision of earlier years written back – (59.32)

Deferred Tax (6.00) 468.00 Fringe Benefit Tax 113.43 120.10

PROFIT AFTeR TAXATIOn 2513.17 2300.59 Balance Brought forward from Previous Year 3853.72 3108.07

BALAnCe AvAILABLe FOR APPROPRIATIOn 6366.89 5408.66

APPROPRIATIOnSProposed Dividend 1115.38 1115.38

Dividend Tax 189.56 189.56

Transfer to General Reserve 260.00 250.00

Balance Carried to Balance Sheet 4801.95 3853.72

Earnings per share in Rs. (Note 20) - Basic Rs. 3.42 Rs. 3.32 - Diluted Rs. 3.42 Rs. 3.17

notes on the Accounts 18

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2007-2008 2006-2007 Rupees

lakhs Rupees

lakhs Rupees

lakhsRupees

lakhs

(A) CASH FLOW FROM OPeRATInG ACTIvITIeSNet Profit before tax and extraordinary items 3464.37 3645.69

Adjustments for:Depreciation 1602.27 1002.14

Dividend received (27.66) (1.42)

Miscellaneous Expenditure written off 30.91 5.10

Profit on sale of Property (1121.61) –

Loss / (Profit) on sale of Fixed Assets (9.81) (76.54)

Sale of Development Rights in Property (600.00) (3337.00)

Interest Received (216.15) (120.35)

Profit on sale of investment- Long Term (1805.48) (27.21)

Profit on sale of investment- Current – (0.73)

Interest expenses 2349.12 201.59 1858.98 (697.03)

Operating Profit before working Capital changes 3665.96 2948.66

Adjustments for:Trade and other Receivables - (Increase)/ Decrease (3649.32) (3672.83)

Inventories - (Increase)/ Decrease (800.97) (1817.20)

Trade Payables - Increase/(Decrease) (3753.38) (8203.67) 1008.54 (4481.49)

Misc. Expenditure - Campsite Expenses (57.90) (38.91)

Cash generated from Operations (4595.61) (1571.74)

Direct Taxes paid (net of refunds) (408.08) (365.00)

Fringe Benefit Tax Paid (109.16) (94.86)

Interest paid (2319.71) (2836.95) (1852.57) (2312.43)

Cash inflow/(outflow) before exceptional item (7432.56) (3884.17)

Exceptional items

(i) Compensation under voluntary retirement Scheme (94.34) (471.87)

neT CASH InFLOW/(OUTFLOW) FROM OPeRATInG (7526.90) (4356.04)

ACTIvITIeS

(B) CASH FLOW FROM InveSTInG ACTIvITIeSPurchase of Fixed Assets (2508.14) (5408.20)

Sale of Fixed Assets 32.21 140.66

Sale of Development Rights in Property 300.00 1450.00

Sale of Investment - Long Term 3867.94 33.31

Purchase of Investments

Subsidary Company (912.60) –

Others – (951.31)

Sale of investments - Current – 1000.73

Purchase of Investment- Current – (1000.00)

Advance to subsidiary Companies (43.74) (58.92)

Loans Realised – 162.41

Proceeds from Sale of Property 1138.78 –

Interest Received 216.15 120.35

Dividend received 27.66 1.42 neT CASH InFLOW/(USeD) In InveSTInG ACTIvITIeS 2118.26 (4509.55)

CASH FLOW STATeMenT FOR THe YeAR enDeD 31ST MARCH, 2008

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2007-2008 2006-2007 Rupees

lakhs Rupees

lakhs Rupees

lakhsRupees

lakhs

(C) CASH FLOW FROM FInAnCInG ACTIvITIeS

Proceeds from borrowings 14973.77 11687.99

Proceeds from Fixed Deposits (178.09) (177.03)

Repayment of borrowing (7887.70) (5070.82)

Share Premium Received 4447.46 –

Loans from Companies 500.00 7100.37

Repayment of Loans to Companies (4585.17) (2700.37)

Dividend paid (1103.48) (974.06)

Dividend tax paid (189.56) (136.19)

NET CASh INFLOW/(OUTFLOW)

FROM FINANCIAL ACTIvITIES 5977.23 9729.89

Net increase/(decrease) in cash and cash equivalents 568.59 864.30

Cash and Cash Equivalents as at the commencement of the year- Cash and Bank Balances 3210.21 2345.91

Cash and Cash Equivalents as at the end of the year -Cash and Bank Balances 3778.80 3210.21

CASH FLOW STATeMenT FOR THe YeAR enDeD 31ST MARCH, 2008






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As at As at 31st March 2008 31st March 2007

(Rupees Lakhs) (Rupees Lakhs)

Schedule 1SHARe CAPITAL AUTHORISeD 12,50,00,000 Equity shares of Rs.2 each 2500.00 2500.00 (Previous year 2,50,00,000 Equity shares of RS. 10 each)

ISSUeD AnD SUBSCRIBeD 7,43,58,735 Equity shares of Rs.2 each fully paid 1487.17 1387.17 (Previous year 1,38,71,747 Equity shares of Rs.10 each fully paid up)

Of the above(a) 465025 shares represent 93005 shares after subdivision of shares

from Rs.10/- to Rs.2/- each during the year, allotted as fully paid pursuant to contract without payment being received in cash

(b) 2,60,75,125 shares represent 52,15,025 shares after subdivision of shares from Rs.10/- to Rs.2/- each during the year, allotted as fully paid up bonus shares by capitalisation of Reserves.

(c) Pursuant to the merger scheme as approved by BIFR, 15,18,735 shares represent 3,03,747 shares after sub-division of shares from Rs.10/- to Rs.2/- each during the year, allotted effective 31/03/1999 to the shareholders of IDL Salzbau (India) Limited.

(d) 2,93,50,000 represent 58,70,000 after sub-division of shares from Rs.10/- to Rs.2/- each during the year, allotted effective 1st January, 2002 consequent to the amalgamation of erstwhile Gulf Oil India Limited to the shareholders of erstwhile Gulf Oil India Limited

(e) 50,00,000 represent 10,00,000 shares after sub-division of shares from Rs.10/- to Rs.2/- each allotted during the year, Share warrants issued in the earlier year have been converted into shares

Schedule 1A WARRAnTS COnveRTIBLe TO eQUITY SHAReS

10,00,000 warrants, Rs.50.50 paid for each warrant as application money.

- 505.00

Each warrant is convertible into one Equity Share of Rs.10 each at a price of Rs.505 (including Rs.10 face value), in one or more tranches on or before the expiry of 18 months from the date of allotment I.e. 15 December, 2005 by paying the balance amount

Schedule 2ReSeRveS AnD SURPLUS

a) SeCURITIeS PReMIUM ACCOUnT 4852.45 - Received during the year

b) CAPITAL ReSeRve Per last Balance Sheet 0.75 0.75

c) eXPORT ALLOWAnCe ReSeRve Per last Balance Sheet 10.50 10.50

d) RevALUATIOn ReSeRve (refer note 26) 183896.69 -e) GeneRAL ReSeRve

Per last Balance Sheet 10523.74 10273.74 Add : Transfer from Profit & Loss Account 260.00 250.00 Less: Adjustment on account of initial adoption of Accounting Standard 15 (Revised on) on Employee Benefits 444.69 - (Refer Note 18 on schedule 18) 10339.05 10523.74

f) PROFIT & LOSS ACCOUnT Per Account Annexed 4801.95 3853.72

203901.39 14388.71

SCHeDULeS TO THe ACCOUnTS

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As at As at31st March 2008 31st March 2007(Rupees Lakhs) (Rupees Lakhs)

Schedule 3

SeCUReD LOAnS

A. From Banks

(i) Cash Credit (includes Working Capital Demand Loan) 4215.44 6888.61

(ii) Overdraft against term deposit receipts - 166.94

(iii) Foreign Currency Working Capital Loan 829.34 -

(iv ) Term Loans

(a) EXIM Bank - 666.67

(b) Syndicate Bank - 933.23

(c) State Bank of India 2822.36 2969.61

(d) State Bank of Hyderabad 2467.00 1730.89

(e) State Bank of Indore - 448.81

(f) ABN Amro Bank 1543.29 1352.35

(g) Oriental Bank of Commerce 352.00 -

(h) Andhra Bank 284.09 -

B. Other Loans

SREI Infrastructure Finance Limited 944.20 387.70

Indian Renewable Energy Development Authority - 2.46

C. Interest accrued and due on loans taken over - -

from IDL Salzbau (India) Limited payable to

Housing and Urban Development Corporation

13457.72 15547.27

Schedule 4

UnSeCUReD LOAnS

Fixed Deposits [See note 13(f)]

(interest accrued and due Rs. 6.92 lakhs;

31.03.07 Rs.2.44 lakhs) 312.67 490.76

Deferred Hire Purchase Credits 449.68 291.11

ICICI Bank 650.48 982.95

Short term:

Dealers' deposits 69.65 85.85

Buyers Credit 9365.72 -

Inter Corporate Loans 315.20 4,400.37

11163.40 6251.04

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(Rupees Lakhs)

COST DEPRECIATION NET BOOK vALUEIncrease For the On

31.03.2007 due to Additions/ Deductions/ 31.03.2008 31.03.2007 Year Deductions/ 31.03.2008 31.03.2008 31.03.2007revaluation Adjustments Adjustments Adjustments

Land-Freehold 362.22 183896.69 62.06 5.24 184315.73 - - - - 184315.73 362.22 (see note 3

below) Land-Leasehold 19.10 - - 19.10 4.23 0.22 - 4.45 14.65 14.87Buildings 3402.75 - 15.13 98.62 3319.26 827.25 92.79 38.81 881.23 2438.03 2575.50

(see note 2 below)

(see note 2 below)

Leasehold Improvements 6.80 - - - 6.80 6.80 - - 6.80 - -Plant & MachineryEquipments etc. 18037.84 - 1098.23 30.01 19106.06 6556.29 1360.28 20.50 7896.07 11209.99 11481.55Furniture, Fixtures& Office Appliances 1113.19 - 278.21 24.11 1367.29 644.91 94.36 19.23 720.04 647.25 468.28Vehicles 677.04 - 84.50 17.66 743.88 352.59 54.62 9.66 397.55 346.33 324.45Technical Knowhow 24.41 - - - 24.41 24.41 - - 24.41 - -

23643.35 183896.69 1538.13 175.64 208902.53 8416.48 1602.27 88.20 9930.55 198971.98

31.03.2007 14030.07 - 9847.97 234.69 23643.35 7522.85 1002.14 108.51 8416.48 - 15226.87

Schedule 5FIXeD ASSeTS:

Notes:-

(1) Assets costing Rs. 327.50 lakhs (previous year Rs.346.07 lakhs) have been acquired on hire purchase, the legal ownership of which will be transferred to the Company after the final payment.

(2) Certain properties at Bangalore/ Hyderabad, cost Rs. 74.83 lakhs and accumulated depreciation Rs. 26.96 lakhs in which the development rights have been sold to IDL Arom International Limited, reclassified as inventories.

(3) Adjustments include Rs.62.06 lakhs, reclassified from Inventories to Fixed assets.


Schedule 6InveSTMenTS At cost, unless otherwise stated

UnQUOTeD- LOnG TeRMTRADe

Shares in subsidiary companiesIDL Agro Chemicals Limited 24.00 24.00 2,40,000 Equity shares of Rs.10 each

IDL Buildware Limited (formerly IDL Finance Limited)19,70,000 Equity shares of Rs. 10 each 203.41 203.41

2,00,000 8% Redeemable CumulativePreference Shares of Rs. 100 each

200.00 200.00

IDL Arom International Limited (subsidiary upto 31st December 2006)(Previous Year: 58,803) Equity Shares of Rs. 10 each - 5.90

23,62,000(Previous year 20,62,000)10% Redeemable Cumulative Preference Shares of Rs. 100 each

2362.00 2062.00

Gulf Oil Bangladesh Limited 71.91 71.91 1,77,939 Equity Shares of Bangladesh Taka 50 each

PT Gulf Oil Lubricants Indonesia 680.70 680.70 15,000 shares of Indonesia Rp.8,61,900 eachequivalent to US $ 1,500,000

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Schedule 6 (Contd.)Gulf Carosserie India Limited3,80,001 Equity shares of Rs. 10 each 38.00 38.00Less: Diminution in value 38.00 - 38.00 -

Gulf Oil (Yantai) Co., Limited41,32,540 (Previous year 27,55,030) Equity shares of US $ 1 each 2157.86 1245.26

nOn-TRADe500 Shares of Rs.10 each inIDL Chemicals Employees' Co-operativeCredit Society Limited, hyderabad

0.05 0.05

500 Shares of Rs.10 each inIDL Chemicals Employees' Co-operativeCredit Society Limited, Rourkela

0.05 0.05

27,978 units of Rs.10 each in UTI Bond Fund of Unit Trust of India

2.97 2.97

Pachora Peoples Co-operative Bank Limited2 shares of Rs. 100 each

- -

Gulf Ashley Motors Limited1,14,000 Equity Shares of Rs 100 each

114.00 114.00

Patancheru Enviro-Tech Limited58460 Equity Shares of Rs 10 each

3.00 3.00

QUOTeD-LOnG TeRMnOn-TRADe

Ashok Leyland Limited1,00,000 Equity Shares of Rs. 1 each

24.23 24.23

hinduja TMT Limited96 Equity shares of Rs. 10 each

0.06 0.06

Jammu & Kashmir Bank Ltd.2,400 Equity shares of Rs. 10 each

0.91 0.91

Indusind Bank Limited14,623 (Previous year 43,14,623) Equity Shares of Rs. 10 each fully paid

6.93 2063.49

5852.08 6701.94

notes:1. Aggregate Carrying cost of quoted investments 32.13 2088.69

2. Aggregate Market Value of quoted investments 63.10 1864.44

3. Aggregate cost of unquoted investments 5819.95 4613.25

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Schedule 7

InvenTORIeS

(At lower of cost and net realisable value)

Land / Building for Property development, at cost 47.87 62.06

Stores & Spares 389.93 247.05

Packing Materials and Fuel 341.00 196.94

Raw Materials 4718.31 5338.97

Work-in-Process 1484.11 679.21

Finished Goods 4162.05 3703.70

Excise Duty on Finished Goods 368.32 496.88

11511.59 10724.81

Schedule 8

SUnDRY DeBTORS - UnSeCUReD

a) Debts outstanding for a period exceeding six months:

Considered good 2617.68 2029.67

Considered doubtful 2274.11 1793.24

b) Other Debts :

Considered good * 13684.17 12846.21

18575.96 16669.12

Less : Provision for doubtful debts 2274.11 1793.24

16301.85 14875.88

* Includes dues from subsidiaries Rs. 57.91 Lakhs (31.03.07 - Rs. 26.87 lakhs)

Schedule 9

CASH AnD BAnK BALAnCeS

Cash/Cheques on hand 593.85 897.34

With Scheduled Banks :

Current Account 1011.96 1268.25

Fixed Deposits/Margin account 2172.99 1044.62

3778.80 3210.21

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- - - As at As at31st March 2008 31st March 2007(Rupees Lakhs) (Rupees Lakhs)

Schedule 10

LOAnS AnD ADvAnCeS(Unsecured, considered good unless otherwise specified)Advances to Subsidiary Companies (interest free) *

IDL Agro Chemicals Limited 146.74 130.14 Gulf Carosserie India Ltd., 5.04 3.53 IDL Buildware Limited 321.95 296.32 Advance tax (net of provisions) 57.89 - Advances recoverable in cash or in kind or for value to be received:

Considered good 4996.79 2977.44 Considered doubtful 63.70 63.70

5060.49 3041.14 Less : Provision for doubtful advances 63.70 63.70

4996.79 2977.44 Balance with Excise Authorities on Current Account 1774.32 1570.32

7302.73 4977.75 * Maximum amount outstanding during the yearIDL Agro Chemicals Limited-Rs.146.74 Lakhs, 31-03-2007 Rs.130.14 lakhsGulf Carosseire India Limited-Rs.5.03 lakhs, 31-03-2007 Rs.3.53 lakhsIDL Buildware Limited- Rs. 330.63 Lakhs, 31-03-2007 Rs.299.98 lakhs

Schedule 11

CURRenT LIABILITIeSAcceptances 877.30 4192.96 Sundry Creditors 12758.34 13241.14 Interest accrued but not due 82.53 53.12 Unpaid/Unclaimed Dividends 47.87 35.97

13766.04 17523.19 Schedule 12PROvISIOnS Provision for Taxation (net of Advance Tax) - 0.19 Provision for Fringe Benefit Tax 29.51 25.24 Proposed dividend 1115.38 1115.38 Tax on dividend 189.56 189.56 Long term employee benefits - Leave encashment 227.94 124.77 - Gratuity 974.11 358.51

2536.50 1813.65 Schedule 13MISCeLLAneOUS eXPenDITURe (to the extent not written off or adjusted) Payments under Voluntary Retirement Scheme 610.58 1,010.01 Camp site Expenditure 60.80 33.81

671.38 1043.82

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Year ended31st March 2008(Rupees Lakhs)

Year Ended31st March 2007(Rupees Lakhs)

Schedule 14

OTHeR InCOMeDividend income - Long Term 27.66 1.42

Profit on sale of Property 1121.61 -

Profit/(loss) on Sale/Scrap of other Fixed Assets 9.81 76.54

Profit on sale of investments - Long term 1805.48 27.21

Current - 0.73

Insurance Claims 59.06 56.19

Export Incentives (DEPB) 32.17 105.07

Miscellaneous 256.81 50.83

3312.60 317.99

Schedule 15COST OF MATeRIALS

Raw Materials Consumed :

Opening Stock 5338.97 3910.31

Add : Purchase 33426.31 30628.18

38765.28 34538.49

Less : Closing Stock 4718.31 5338.97

34046.97 29199.52

Purchase of Finished Goods 3838.98 5542.09

(Increase)/Decrease in Finished Goods and

Work-in-Process:

Closing Stock



5646.16 4382.91

Opening Stock :



Closing Stock of trial run production - 388.79

4382.91 3683.46

(1263.25) (699.45)

Packing Materials Consumed 2725.00 2402.52

39347.70 36444.68

Less: Scrap realisation 111.21 131.71

39236.49 36312.97


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Year ended31st March 2008 (Rupees Lakhs)


Schedule 16

eXPenSeSPayments to and provisions for Employees :Salaries, Wages and Bonus 4910.88 3896.10 Contribution to Provident Fund, GratuityFund and other Funds 509.23 482.22 Workmen and Staff Welfare Expenses 477.06 477.86

5897.17 4856.18 Interest Expense:On Fixed Term Loans 1293.14 959.00 Others 1055.98 899.98

2349.12 1858.98 Less: Interest Income (Gross): (Tax deducted at source Rs. 25.02 Lakhs;Previous Year Rs. 24.03 Lakhs)On deposits, income-tax refunds, loans to employees etc. 216.15 120.35 Net Interest 2132.97 1738.63 Stores, Spare Parts and Loose Tools consumed 368.38 175.79 Processing Charges 755.19 663.11 Power, Fuel and Water 1050.33 746.32 Rent 862.11 313.11 Rates and Taxes 606.50 191.12 Expenses on Operation Contracts 9500.64 3878.98 Insurance 238.91 230.04 Advertising 1688.85 876.96 Distribution Expenses 2817.76 2416.75 Commission on sales 246.36 136.56 Discount on sales 4198.83 3568.68 Repairs to Buildings 52.22 39.45 Repairs to Machinery 183.72 112.95 Travelling Expenses 625.28 526.71 Bank charges and other Financial charges 431.26 489.03 Directors' Fees 19.18 10.42 Commission to non-wholetime Directors 2.62 7.97 Postage, Telephone and Telex 178.33 174.98 Legal & Professional charges 437.92 263.51 Loss on sale of Assets 6.46 -Provision for doubtful debts 480.87 320.48 Bad advances written offBad Debts, advances etc written off - 307.84

Less: Provision for doubtful debts written-back - - 307.84 -Deferred Revenue expenses 5.10 Camp site Expenditure 30.91 -Software expenditure - 4.05 Royalty 440.22 300.01 Miscellaneous 1072.77 782.13

34325.76 22829.02


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Schedule 17

CAPACITY, PRODUCTIOn, STOCKS, SALeS AnD COnSUMPTIOn:

(a) Quantitative information in respect of goods produced / purchased:

Item UnitCAPACITY PeR AnnUM

Licensed Installed* Production2007-08 2006-07 2007-08 2006-07 2007-08 2006-07

Detonators Millon Nos 192.00 192.00 192.00 192.00 113.66 87.69

Detonating Fuse Millon Metres 45.00 45.00 22.50 22.50 25.50 21.99

Safety Fuse Millon Metres 87.78 # 87.78 # - - - -

Industrial Explosives-Cartridged, Bulk, Emulsionand ANFO

Tonnes 138000 123000 138000 118000 55265.83 46406.67

Boosters Tonnes 190.00 190.00 125.00 90.00 219.26 131.68

Penta ErythritolTetra Nitrate(PETN) @

Tonnes 1440 1440 - - - -

Exploders Numbers 500 500 - - - -

Single or double orMultilayer clad plates $

Sq.MetresCorrespondingto Tonnes

! ! !! !!1667.70

58.431804.45

65.82

Lubricating Oils KL nA NA 75000 75000 40796 39787

Speciality Chemicals

Formulations-tablets Thousand No's (See note 2 below) 995.27 1449

Bulk Drugs Tonnes nA - 80 - 39.75 66.50

* Installed Capacity is as certified by the Managing Director and not verified by the auditors, being a technical matter

notes:1. Licenced capacity includes letter of intent issued by Government of India.

# As given in the licence, 12 millions coils per annum which is equivalent to 87.78 million metres

@ Only Bhiwandi Plant for which a separate licence has been obtained, however, the plant has since been closed.

! 1,00,000 Sq metres corresponding to maximum tonnage of 25,000 tonnes of cladding plates

!! Installed Capacity is not estimatable as production can be increased substantially with the facilities available merely by increasing the size/weight of clad plates

$ Excludes product meant for development production of intermediate products captively consumed and products 'for which no separate licence was required, has not been included above.

2 (a) In respect of formulations-tablets, production is carried out at third party manufacturing facilities.

(b) Licensed capacity is not indicated as industrial licenses for all bulk drugs, intermediates and their formulations stands abolished in terms of Press Note No 4 (1994 series) dated 25th October 1994 issued by the Department of Industrial Development, Ministry of Industry, Govt of India.

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(c) Purchase of Finished Goods:

Item Unit2007-08 2006-07

Qty RupeesLakhs

Qty RupeesLakhs

Safety Fuse M.Metres 0.60 14.40 0.56 11.58

Grease/Unprocessed Oils MT 2761 3531.73 9274.00 4972.22

Filters Nos 658610 223.30 705016 269.75

Car Care Products KL - - 137688 167.75

GRACO Nos 290 26.42 327 48.65

D Cord M Metres 1.25 28.78 2.36 65.16

Formulations/Tablets Thousand No’s 243.10 14.35 6.98

3838.98 5542.09

(d) Raw Materials Consumed:

Item Unit2007-08 2006-07

Qty RupeesLakhs

Qty RupeesLakhs

Coating Materials Tonnes 714.00 465.60 534.28 378.29

Chemicals for :

Explosives/Detonators Tonnes 46321.00 8037.97 41159.69 5851.83

Bulk Drugs/Formulations Tonnes 3373.48 6327.27 1389.00 3004.56

Metals Tonnes 1108.00 1635.18 950.46 1343.66

Yarn & Paper Tonnes 163.00 154.13 807.88 311.82

Base Oil Tonnes 36369.97 13461.41 32111.84 14706.40

Additives Tonnes 2629.50 3225.10 2577.46 3245.74

Miscellaneous 740.31 357.22

34046.97 29199.52


(b) Stock of Finished Goods / Sales, including income from other Operations:

Item Unit

STOCK OF FINISHED GOODS SALES

31.03.2008 31.03.2007 31.03.2006 2007-2008 2006-2007Qty Rupees

LakhsQty Rupees

LakhsQty Rupees

LakhsQty Rupees

LakhsQty Rupees

Lakhs

Detonators Millon Nos 17.41 984.71 15.48 968.44 16.75 988.26 112.43 6762.57 89.01 4841.02

Detonating Fuse Millon Metres 3.37 114.64 1.83 58.42 2.69 84.76 25.24 1088.13 25.16 992.12

Safety Fuse - Purchased Millon Metres - - 0.25 7.03 0.11 2.29 0.31 11.03 0.51 16.90

Cartriged ANFO & NCN(High Explosives)

Tonnes 561.47 120.90 574.61 105.99 834.74 172.23 55071.45 11877.11 46657.62 9752.24

Boosters Tonnes 63.25 46.98 24.06 30.68 15.96 24.52 176.11 297.48 122.36 213.97

Single or double or Sq.Metres - - - - - - 1667.70 910.05 1804.45 808.44Multilayer clad plates Corresponding

to Tonnes - - - - - - 58.43 - 65.82 -Lubricating Oils KL 2901 1645.03 2814.00 1886.70 2506.00 1525.62 43382 41468.64 48738 39100.69

Filters Nos 192279 94.49 236115 108.62 99647.00 40.97 702446 347.89 568548 276.28

Car Care Products KL 43230 57.87 135132 170.14 81814 79.21 91902.00 118.96 84370 116.12

GRACO N0’S 166 17.09 154.00 18.86 137.00 21.09 278.00 47.45 310.00 64.62

Bulk Drugs- Chemicals Tonnes 9.16 1066.99 5.60 343.70 - 161.80 36.08 5724.62 78.45 3890.76

Formulations- Tablets Thousand No’s 461 13.35 309.00 5.12 - - 10.87 26.69 1140.00 9.88

Income from Operation - Contracts

- - - - - - - 14067.67 - 6443.10

Income from Property -Rent - - - - - - - 157.73 - 104.10

Others(Ammonium Nitrate)

- - - - - - 415.50 - 235.40

4162.05 3703.70 3100.75 83321.52 66865.64

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18. nOTeS On THe ACCOUnTS FOR THe YeAR enDeD 31ST MARCH, 2008

1. ACCOUnTInG POLICIeS

The accounts have been prepared primarily on the historical cost convention and in accordance with the relevant provisions of the Companies Act, 1956 and the accounting standards notified by the Companies (Accounting Standards) Rules, 2006. The significant accounting policies followed by the company are stated below:

I. FIXeD ASSeTS:

Fixed assets are shown at cost less depreciation. Cost comprises the purchase price and other attributable expenses.

II. DePReCIATIOn On FIXeD ASSeTS:

(i ) The Company follows the straight-line method of charging depreciation on all its fixed assets. The Depreciation has been provided in the manner and at the rates prescribed in Schedule XIV to the Companies Act, 1956 on all the assets except certain equipments which are depreciated over their estimated useful life.

(ii) Leasehold land is being amortised in equal installments over the lease period.

(iii) Technical Know-how is amortised over a period of five to seven years.

III. InveSTMenTS:

Current Investments are valued at lower of cost and fair value. Long Term Investments are valued at cost. Where applicable, provision is made if there is a permanent fall in valuation of long term Investments.

Iv. InvenTORIeS:

Inventories are valued at lower of cost and net realisable value. The method of arriving at cost of various categories of inventories is as below:

(a) Stores and Spares, Raw and Packing material Weighted Average method

(b) Finished goods and work-In-process Weighted average cost of production, which comprises direct material costs, and appropriate overheads.

v. SUnDRY DeBTORS AnD ADvAnCeS:

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for respectively.

vI. FOReIGn eXCHAnGe TRAnSACTIOnS:

Transactions made during the year in foreign currency are recorded at the exchange rate prevailing at the time of transaction. Assets and Liabilities related to foreign currency transactions remaining unsettled at the year end are translated at the contract rates when covered by forward cover contracts and at year-end rate in other cases. Realised gains and losses on foreign exchange transactions other than those relating to fixed assets are recognised in the profit and loss account. Upto 31st March, 2007 Gain/loss on transaction of long term liabilities incurred to acquire fixed assets is treated as an adjustment to the carrying cost of fixed assets.

vII. RevenUe ReCOGnITIOn:

a) Sale of goods is recognised at the point of despatch of finished goods to customers. Sales include amount recovered towards excise duty but exclude sales tax. Export incentive under the Duty Entitlement Pass Book scheme has been recognized on the basis of credits afforded in the passbook.

b) Income from services is recognized at the time of rendering the services.

c) Dividend income from investment is recognised when the owner’s right to receive payment is established.

d) Income from Property Development is recognised as soon as contract is entered with the Party and the consideration is received.

vIII. ReSeARCH AnD DeveLOPMenT eXPenSeS:

Research and Development expenditure of revenue nature is written off in the year in which it is incurred and expenditure of a capital nature is added to fixed assets.

IX. eMPLOYee ReTIReMenT BeneFITS:

Retirement benefits to employees are provided for by means of gratuity, superannuation and provident fund.

The gratuity liability is determined based on the actuarial valuation by an approved actuary.

Payments in respect of superannuation are made to the fund administered by LIC. Provision in respect of leave encashment is made based on actuarial valuation as at year end.

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X. TAXeS On InCOMe:

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or subsequent periods.

XI. SeGMenT RePORTInG:

The accounting policy adopted for Segment Reporting is in line with the accounting policy of the Company with the following additional policy for Segment Reporting:-

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to the segments on a reasonable basis, have been included under “Unallocated Expenses”. Inter Segment transfers are at cost.

XII. MISCeLLAneOUS:

a) Payments under the voluntary Retirement Scheme are written off over a period of five years/four years/three years from the settlement date or till the period ending 31st March, 2010, whichever is earlier.

b) Camp site expenditure; i.e., Expenditure on setting up camps for execution of Operation contracts is written off over the period of the contract.

2. Managerial Remuneration under Section 198 of the Companies Act, 1956

2007-08 2006-07 Rs. Lakhs Rs. Lakhs

Salaries 34.53 30.72

Commission 2.62 7.97

Contribution to Provident Fund and Super annuation Fund 5.83 5.18

Benefits 2.28 3.16

Commission to non-wholetime Directors 2.62 7.97

47.88 55.00

note : Having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an individual employee

is not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in the above computation.

3. Computation of Net Profit and Directors Commission

2007-08Rs. Lakhs

2006-07Rs. Lakhs

Profit before Taxation 2970.60 3183.37

Add:

Depreciation 1602.27 1002.14

Directors Remuneration 47.88 55.00

Provision for doubtful debts 480.87 2131.02 320.48 1377.62

5101.62 4560.99

Less:

Depreciation under Section 350 of the Companies Act, 1956 1602.27 1002.14

Profit on sale of Investment 1805.48 27.94

Sale of development rights in property 300.00 2337.00

Profit / (loss) on sale of Fixed Assets 1131.42 76.54

Bad debts written off - 4839.17 307.84 3751.46

262.45 809.53

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2007-08Rs. Lakhs

2006-07Rs. Lakhs

Commission

(a) Managing Director @ 1% 2.62 7.97

(b) Non-Wholetime Directors @1% 2.62 7.97

4. Payment to Auditors (excluding Service Tax)

Audit Fees 14.50 14.50

Tax Audit 2.50 2.50

Other Services 8.27 7.45

Reimbursement of Expenses 1.67 0.68

5. Payments to Branch Auditors (excluding Service Tax)

Audit Fees 6.00 6.00

Tax Audit 2.00 2.00

Other Services 3.70 3.80

Reimbursement of Expenses 1.75 1.65

6. expenditure in Foreign Currency

Interest 295.58 201.15

Commission on Exports 67.00 54.60

Other- travelling expenses, books & periodicals etc., 11.10 12.57

Royalty (inclusive of Tax Deducted at source) 440.22 300.01

7. earnings in Foreign exchange

Export on F O B Basis 4298.03 3893.00

8. Amount remitted during the year in foreign currency on account of dividend

Number of non-resident Shareholders 1 2

Number of Shares held 6800980 6800980

Dividend remitted (Rs. Lakhs) 510.07 476.07

Dividend on account of year 2006-07 2005-06

9. value of Imports of C I F Basis

Raw Materials 13742.38 14849.87

Capital Goods 629.59 978.85

Stores & Spares 3.57 6.66

Traded Goods 1480.52 2803.28

10. Capital Commitments

Estimated amount of contracts remaining to be executed on capital account 55.23 0.52

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11. Consumption of raw material 2007-08 2006-07

Rs.Lakhs Percentage Rs. Lakhs Percentage(a) Raw material

Imported 17265.43 50.71 16315.60 55.88Indigenous 16781.54 49.29 12883.92 44.12

34046.97 100.00 29199.52 100.00(b) Components and Spare Parts

Note : Components and Spare Parts referred to in para 4 D (c) of Part II of Schedule VI to the Companies Act, 1956 are assumed to be those incorporated in goods produced and not those used for maintenance of Plant and Machinery.

12. COnTInGenT LIABILITIeSAs at

31-03-2008(Rs Lakhs)

As at31-03-2007(Rs Lakhs)

(a) Corporate Guarantees 349.02 390.00(b) Bills discounted 277.84 77.64(c) Claims against the Company not acknowledged

as debts hence not provided(i) Income Tax Demands 34.93 552.99(ii) Sales Tax Demands (see Note 14) 3215.57 1783.61(iii) Excise Demands 479.01 190.93(iv) Additional Demands towards cost of land 3.81 3.81(v) Claims of workmen/ex-employees 79.40 97.13(vi) Other Matters 564.33 626.85

13. SeCUReD LOAnS:

(a) Loans from banks on Cash Credit account including foreign currency demand loan from Bank of Bahrain & Kuwait B.S.C is secured by hypothecation of all current assets of the Company including raw materials, finished goods, stocks-in-process, stores and spares (not relating to Plant & Machinery) and present and future book debts of the Company and by a second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company both present and proposed ranking, pari-passu with other working capital lenders.

(b) The term loans from State Bank of India is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and by hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables of the Company ranking pari-passu with other working capital lenders and is further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company both present and proposed ranking, pari-passu with other working capital lenders.

(c) The Term loan from State Bank of hyderabad is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company, present and future.

(d) The Term loan from Oriental Bank of Commerce is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed asets of the Company, present and future.

(e) The Term loan from Andhra Bank is secured by first charge on the fixed assets out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company, present and future.

(f) Fixed Deposits to the extent of Rs 284.57 Lakhs were secured by a second charge on all tangible movable property and fixed assets including all movable machinery and plant, machinery, spares and stores, tools and accessories and other movables both present and future as approved by the Controller of Capital Issues vide his letter dated 1st November,1980.

(g) Term Loans from ABN Amro Bank Nv and SREI Infrastructure Finance Limited are secured by way of first charge on specific mining equipment of the Company.

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14. ORISSA SALeS TAX CASe

1. In respect of taxability under the Central Sales Tax Act. 1956, of stock transfers from Rourkela Unit to its consignment agents outside the State of Orissa, the amount deposited under protest by the Company with the Orissa Sales Tax authorities in respect of this matter stands at Rs. 150.17 Lakhs as on 31 March 2008 and the said deposit is included under Loans and Advances (Schedule 10).

2. The Hon’ble High Court of Orissa vide it’s Order dated 11th April 2006, held that such stock transfers constituted inter-state sales and in respect of which the Company filed Special Leave Petition in the hon’ble Supreme Court of India. The Hon’ble Supreme Court vide its Order dated 16.11.2007, held that the stock transfers constituted inter state sale in respect of 10 years assessment years viz. 1976-77 to 1983-84, 1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on the supplies made by the Company to the subsidiaries of Coal India Limited as inter state sale. The Company’s review petition filed in the hon’ble Supreme Court against the above Order was dismissed on 11.03.2008.

The Orissa commercial tax authorities served tax re-computation orders relating to the assessment years 1976-77 to 1983-84 demanding Rs. 401.00 lakhs. The Company has contested the same and has filed a writ petition in the Hon’ble Orissa High Court challenging the demand since the assessment procedures required to be carried out in accordance with the Order of the Hon’ble Supreme Court Order had not been complied with.

The Company has been advised by eminent counsel that as local sales tax has already been paid on such ‘inter-state sales’ to States other than the State of Orissa, such tax should be refunded by the other States as it has been wrongly subjected to tax.

3. The Company has also received demands aggregating to Rs.809.79 lakhs from Commissioner of Commercial Taxes in respect of assessment year 1984-85 through 1987-88 which has been contested and a stay for payment of the demand has been granted by the Hon’ble High Court of Orissa.

4. Further, in the previous years the Company had received various demands aggregating to Rs.1294.08 lakhs from the Assistant Commissioner, Sales Tax, Rourkela through appeal orders in respect of assessment year 1994-95, 1995-96 and 1998-99 treating the stock transfers to various branches/consignment agents of the Company as sales under Central Sales Tax. The Company has filed petition in the hon’ble high Court of Orissa, Cuttak for full stay of the demand of Asst. Commissioner of Sales Tax Rourkela since in earlier assessment years on the similar cases Hon’ble High Court has decided the matter in favour of the Company. The Hon’ble High Court of Orissa has granted full stay for payment of Sales Tax demands till the disposal of Company’s Appeal filed before Orissa Sales Tax Tribunal.

5. The Company is of the opinion that in view of the foregoing no provision is required to be made on this account.

15. FIXeD ASSeTS Buildings include:

(i) Rs.7.09 lakhs, which represents the cost of ownership flats Rs.7.08 lakhs and Rs.0.01 lakhs being the value of Share money in Sett Minar Co-operative housing Society Limited.

(ii) Rs.4.70 lakhs, which represents the cost of ownership flats Rs.4.43 lakhs and Rs.0.27 lakhs being the value of 270 ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited.

16. InveSTMenT In SUBSIDIARY COMPAnIeS

The Company has investments in its subsidiaries of Rs.71.91 lakhs (31st March 2007; Rs.71.91 lakhs) in Gulf Oil Bangladesh Limited (GOBL), Rs.403.41 lakhs (31st March 2007; Rs.403.41 lakhs), in IDL Buildware Limited (IDBL) and Rs.24.00 lakhs (31st March: 2007; Rs.24 lakhs) in IDL Agro Limited (IDLAL) and has given interest free advances of Rs.321.95 lakhs (31st March 2007:Rs.296.32 lakhs) to IDLBL and Rs.146.74 lakhs (31st Mar 2007: Rs.130.14 lakhs) to IDLAL.

GOBL, IDLBL and IDLAL have accumulated losses. however, having regard to the long term involvement of the Company in these companies, management is of the view that no provision is required on this account.

17. TAXATIOn

(i) Pursuant to the scheme of merger with IDL Salzbau (India) Limited (ISIL) sanctioned by the BIFR, the Company has considered the tax losses of Rs. 1498.36 lakhs allowable upto 31st March, 1999 in computing the Company’s income for the year ended 31st March, 1999 giving a tax benefit of Rs. 524.43 lakhs in that year. however, the tax losses and tax benefits thereon do not include funded interest accrued on the loans taken by ISIL from the Financial Institutions as the tax benefit on such interest shall accrue to the Company as and when the interest is paid to the Financial Institutions.

(ii) Pursuant to the Scheme of Amalgamation of erstwhile Gulf Oil ( India) Limited with the Company, brought forward tax losses of Rs 3462.77 lakhs as at 31st December, 2001 have been considered in computing the Company’s tax liabilities for the year 2001-02 and an amount of Rs.1236.24 lakhs was considered as deferred tax asset. In view of insufficient taxable income in subsequent years till 31st March 2008, the Company is not able to utilize the deferred tax asset. The management is confident that the Company would be in a position to make adequate profits in future and would realize the deferred tax asset of Rs.837 lakhs being carried forward on 31st March, 2008.

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(iii) Deferred tax31st March 2008

Rs Lakhs31st March 2007

Rs Lakhs(a) Deferred tax assets arising on account of timing differences:

Unabsorbed business loss/depreciation # 837.00 993.00Provision for doubtful debts/advances 794.62 625.05Other timing differences 493.48 179.61

2125.10 1797.66(b) Deferred tax liabilities arising on account of timing differences:

Depreciation 1655.63 1563.18 # Relates mainly to erstwhile Gulf Oil India Limited, in view of the Company’s future profit projections the Company

expects to fully realise the deferred tax asset.18. Employee Benefits – AS 15: Pursuant to the adoption of the Accounting Standard 15 – Employee Benefits (‘AS-15’), the Company has revised the

provision for retirement and other benefits as at 31st March, 2007. An additional liability (including unrecognized past service cost) of Rs.444.69 lakhs (net of deferred tax Rs.228.98 lakhs) arising out of such revision has been adjusted from the opening revenue reserves as at 1st April, 2007 in accordance with the transitional provisions of AS-15.

The employee benefits are as under: i. Provident Fund : Eligible employees of the Company receive benefits under the Provident Fund which are defined contribution plans

wherein both the employees and the Company make monthly contributions equal to a specified percentage of the covered employee salary. The contributions are made to the Regional Provident Fund and are charged to the Profit and Loss Account in the period they are incurred.

ii. Superannuation : The Company has a defined contribution superannuation scheme to provide superannuation to the eligible employees.

Company makes contributions equal to a specified percentage of the covered employees salary. These Superannuation Plan is funded plan administered by Company’s own Trust which has subscribed to a ‘Group Pension Scheme’ of Life Insurance Corporation of India. The above contributions are charged to the Profit and Loss Account in the period they are incurred.

iii. Gratuity : The Company provides for gratuity, a defined benefit plan (the Gratuity plan) covering eligible employees. Every eligible

employee is entitled to the benefit equivalent to fifteen days/twenty days/thirty days of salary last drawn for each completed year of service depending on the date of joining and category of employment. Liabilities with regard to such gratuity plan are determined by actuarial valuation and are charged to Profit and Loss Account in the period determined. The Gratuity Plan is a funded Plan administered by Company’s own Trust which has subscribed to ‘Group Gratuity Scheme’ of Life Insurance Corporation of India.

iv. Provision for Unutilised Leave : The accrual for unutilized leave is determined for the entire available leave balance standing to the credit of the employees

at period end. The value of such leave balance eligible for carry forward is determined by actuarial valuation and is charged to Profit and Loss Account in the period determined.

The following table sets out the status of the retirement and benefit plans in respect of gratuity as required under the Standard: Rs. Lakhs

31-03-2008Projected benefit obligation at the beginning of the year 1385.24Current Service Cost 89.44Interest Cost 103.33Actuarial (Gain)/Loss (62.71)Benefits Paid (187.35)Projected benefit obligation at the end of the year 1327.95Amounts recognized in the balance sheetProjected benefit obligation at the end of the year 1327.95Fair value of the plan assets at the end of the year (353.84)Liability recognized in the Balance Sheet 974.11Cost of the Retirement and Other Benefits for the yearCurrent Service Cost 89.44Interest Cost 103.33Expected return on plan assets (30.44)Net actuarial (Gain)/Loss recognized in the year (78.00)Net Cost recognized in the Profit and Loss Account 84.33AssumptionsDiscount Rate (%) 8%Long term rate of compensation increase (%) 4%

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19. MISCeLLAneOUS: (a) “Sundry Debtors – Debts outstanding for a period exceeding six months, Considered good”, include Rs. 345.89 lakhs

(net of provision) due from certain customers which are outstanding from earlier years against some of whom the Company has initiated appropriate legal proceedings and is hopeful of recovering the dues in full; pending finalisation in this matter, no provision has been considered necessary for this amount.

(b) The net exchange gain / loss, (i.e., difference between the spot rate on the dates of the transactions and the actual rate at which the transactions are settled/appropriate rates applicable at the year end) credited to Profit & Loss Account is Rs.223.45 Lakhs (Previous Year Rs.153.45 Lakhs).

(c) Exchange difference in respect of forward exchange contracts to be recognised in the Profit and Loss Account in the subsequent accounting period is Rs.8.65 Lakhs Credit (Previous year: Rs.1.12 Lakhs)

(d) (i) The Company has entered into the following derivative instruments: The following are the outstanding Forward Exchange Contracts entered into by the company as on 31st March,

2008:

As on 31.03.2008 As on 31.03.2007Currency Amount Buy/Sell Cross

CurrencyCurrency Amount Buy/

SellCross Currency

US Dollar 1219414 Sell Indian Rupees US Dollar 763476 Sell Indian Rupees

Euro nil nil nil Euro 143000 Sell Indian RupeesUS Dollar nil nil nil US Dollar 1750000 Buy Indian RupeesUS Dollar 1000000 Buy Indian Rupees - - - -Euro 1000000 Buy Indian Rupees - - - -

ii) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

Amounts receivable/(payable) in foreign currency on account of the following:

Rs Lakhs Currency Amount in foreign currency31st March

200831st March

200731st March

200831st March

2007Export of Goods 1955.42 933.73 U S D 4859040 2150190Export of Goods - - Euro - -Import of Goods 6261.18 (4891.23) USD 15688963 (11154771)Import of Goods 1958.00 - Euro 3135000 -FCNRB Loan 829.34 - USD 2061496 -Import of Goods - 360.20 JP Yen - 34125000

(e) Sundry creditors (Schedule 11- Current Liabilities) include Rs nil due to micro enterprises and small enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act 2006). The Company has not received any memorandum (as required to be filed by the supplier with the notified authority under the MSMED Act 2006 ) claiming their status as Micro or Small or Medium Enterprises.

20. eARnInGS PeR SHARe

Year ended31st March, 2008


a. Profit after Tax (Rs. Lakhs) 2513.17 2300.59

b. Weighted average number of EquityShares outstanding during the year 73544527 69358735

c. Potential equity shares on conversion of share warrants - 3246705

d. Weighted Average number of equity shares in computing diluted earnings per share 73544527 72605440

e. Face value of each Equity Share (Rs.) 2 2

f. Earnings per Share

-Basic (Rs.) 3.42 3.32

-Diluted (Rs.) 3.42 3.17Pursuant to the approval of Shareholders, Equity share of face value of Rs. 10/- each of the Company have been sub-divided into five equity shares of Rs. 2/- each with effect from 2nd November, 2007. Accordingly, the earnings per share (basic and diluted) and number of shares have been restated for earlier periods also.

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21. ReLATeD PARTY DISCLOSUReS: (A) Information relating to Related Party transactions as per “ Accounting Standard 18” issued by the Institute of Chartered

Accountants of India.name of the Related Party Relationship

SubsidiaryIDL Agro Chemicals LimitedIDL Buildware Limited (formerly IDL Finance Limited)Gulf Carosserie India LimitedGulf Oil Bangladesh LimitedPT Gulf Oil Lubricants IndonesiaGulf Oil (Yantai) Co. Limited From 18th October, 2007

AssociateGulf Oil (Yantai) Co. Limited, China Till 17th October, 2007IDL Arom International Limited Subsidiary till 31st December, 2006 and Associate till

27th June, 2007Gulf Oil International (Mauritius) Inc. Entity holding more than 20% of the shareholding in the

CompanyN N Investments BV, Netherlands Entity holding more than 20% of the shareholding in the

Company till 13th September, 2007Mr. S.Pramanik, Managing Director Key Management Personnel

(B) Details of transactions between the Company and Related Parties and the status of outstanding balances at the year end

Rs. LakhsParticulars Subsidiaries Associates entity holding more than

20% of the shareholding in the Company

Key Management Personnel

2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07

SalesIDL Buildware Limited - 7.99 - - - - PT Gulf Oil Lubricants Indonesia - 9.81 - - - - Gulf Oil Bangladesh Limited - 24.6 - - - -

RoyaltyGulf Oil International (Mauritius) Inc. - - - - 440.22 300.01 - -

expenses paidIDL Agro Chemicals Ltd., - 13.70 - - - -

Purchase & Other ServicesIDL Agro Chemicals Ltd., 16.45 - - - - - - - IDL Buildware Ltd., - 2.86 - - - - - -

Advances givenIDL Agro Chemicals Ltd., 32.40 12.83 - - - - - - IDL Buildware Ltd., 50.77 27.08 - - - - - - IDL Arom International Ltd., - - - 33.67 - - - - Others - 3.52 - - - - - -

Investment in Preference SharesIDL Arom International Ltd., - 1537.00 - 350.00 - - - -

Investment in equity shares Gulf Oil (Yantai) Co., Ltd 912.60 - - 1245.26 - - - -

Rights in PropertyIDL Arom International Ltd., - 1987.00 300.00 350.00 - - - -

Dividend paid Gulf Oil International (Mauritius) Inc. - - - - 510.07 201.25 - - NN Investments BV, Netherlands - - - - - 274.82 - - Mr.S.Pramanik - - 0.04 0.07

Directors’ Remuneration - - - - - - 45.26 47.03Outstanding balances: (a) Receivables IDL Agro Chemicals Ltd., 146.74 130.14 - - - - - - IDL Buildware Ltd., 323.71 298.04 - - - - - - IDL Arom International Ltd., - - - 40.12 - - - - Others 62.95 28.69 - - - - - - (b) Payables Gulf Oil International (Mauritius) Inc. - - - - 374.19 255.01 - - IDL Agro Chemicals Ltd., 1.15 - - - - - - - (c) Corporate Guarantee (given) Gulf Oil Bangladesh Limited 349.02 390.00 - - - - - -

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22. Disclosure as required by Accounting Standard 19, “Leases” issued by the Institute of Chartered Accountants of India are given below:

(a) Operating Lease:

(i) Where the Company is a Lessee:

The Company’s significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.). The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Profit and Loss Account.

The Company has taken certain Plant and Machinery under non-cancellable leasesRs. Lakhs

31st March 2008 31st March 2007

Total Payments not later than one

year

Payments later than one year but not later

than five years


year


than five years

Total of future minimum payments at the balance sheet date 5296.81 1218.89 4077.92 3085.15 638.84 2446.31

Lease Rent charged to Profit & Loss account for the year amounting to Rs.635.99 lakhs . (Previous year Rs.116.61 Lakhs)

(ii) Where the Company is Lessor: Details in respect of assets given on operating lease:

Rs.Lakhs

Gross Block Accumulated Depreciation as on Depreciation for the year

31-3-2008 31-3-2007 31-3-2008 31-3-2007 2007-08 2006-07

Building 30.17 30.17 10.30 9.85 0.45 0.45

Plant & Machinery 80.32 80.32 46.94 43.02 3.82 3.82

The assets given on lease are not non-cancellable and range between 11 months to 5 years generally and are usually renewable by mutual consent, on mutually agreeable terms. The aggregate lease rentals are recognised as income from property in the Profit & Loss account.

Initial direct costs are recognised as an expense in the year in which these are incurred.

b) Hire Purchase:

(i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term.

(ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value:

Rs. Lakhs

31st March 2008 31st March 2007Total Payments

not later than one

year


than five years


year

Payments later than one year

but not later than five years

Total of minimum hire purchase payments at the balance sheet date 497.70 258.46 239.24 328.04 141.91 186.13

Less: Future Finance Charges 48.03 33.52 14.51 36.93 22.27 14.66

Present value of minimum hire purchase payments at the balance sheet date 449.67 224.94 224.73 291.11 119.64 171.47

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23. SeGMenT InFORMATIOn FOR THe YeAR enDeD 31st MARCH 2008

(i) Primary Business Segments Rs. Lakhs

Explosives Mining & Infrastructure

Contracts

Specialty Chemicals

Property Development Lubricating Oils Others Unallocated Eliminations Total

REVENUE 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

External 18,932.42 14,868.70 14,131.99 6,444.17 4,937.72 3,362.43 600.00 3,337.00 36,913.57 35,596.92 - 0.04 3,113.19 180.56 - - 78,628.89 63,789.82

Inter-segment - - - - - - - 77.79 35.62 - - - - (77.79) (35.62) - -

Total Revenue 18,932.42 14,868.70 14,131.99 6,444.17 4,937.72 3,362.43 600.00 3,337.00 36,991.36 35,632.54 - 0.04 3,113.19 180.56 (77.79) (35.62) 78,628.89 63,789.82

RESULT

Segment result 351.92 (146.32) 1,814.66 1,402.88 (2,067.94) (334.95) 600.00 3,328.10 2,635.32 1,714.07 - (25.68) 3,333.96 5,938.10

Unallocated Corporate Expenses net of unallocated income

2,235.72 (555.18)

Interest Expense (2,349.12) (1,858.98)

Interest Income 216.15 120.35

Dividend Income 27.66 1.42

Profit before Taxation & Exceptional Expenditure

3,464.37 3,645.69

Exceptional Expenditure 493.77 462.32

Net Profit 2,970.60 3,183.37

OTHER INFORMATION

Segment Assets 15,086.56 14,092.50 10,223.33 8,794.49 10,286.98 9,290.78 184,618.22 @ 81.70 16,904.39 14,639.45 211.29 209.49 10,637.02 11,870.80 - - 247,967.79 58,979.21

Segment Liabilities 6,839.70 6,091.44 2,492.51 2,000.77 2,817.11 1,821.82 - - 10,435.42 7,177.61 11.51 14.78 19,983.04 25,591.91 - - 42,579.29 42,698.33

Capital Expenditure 223.53 299.19 1,766.79 4,304.57 66.69 574.93 - - 191.27 196.10 - 259.86 33.41 - - 2,508.14 5,408.20

Depreciation 236.45 229.38 748.58 347.48 370.94 182.40 - - 197.13 201.46 12.54 49.17 28.88 - - 1,602.27 1,002.14

Non- cash expenses other than Depreciation

- 344.34 - 344.34

@ includes Rs.183896.69 Lakhs arising on revaluation of fixed assets (refer note 26).

(ii) Information about Secondary Business Segments Rs. Lakhs

India Outside India Total2008 2007 2008 2007 2008 2007

Revenue by Geographical market on FOB basis 74330.86 59896.83 4298.03 3893.00 78628.89 63789.83Inter Segment - - - - - -TOTAL 74330.86 59896.83 4298.03 3893.00 78628.89 63789.83Carrying amount of segment assets 245657.74 57631.33 2310.05 1347.88 247967.79 58979.21Additions to Fixed Assets 2508.14 5408.20 - - 2508.14 5408.20

(iii) notes: (a) Business Segment: The Company has considered business segment as the primary segment for disclosure Segments have identified and reported taking into account the organisation structure, the nature of products and

services, the deferring risks and returns of the segments The business segments of the Company are (i) Explosives, (ii) Consult dealing in Mining & Infrastructure Contracts,

(iii) Speciality Chemicals dealing in Bulk Drugs & Pharma, (iv) Property Development, (v) Lubricating Oils, (vi) Others. Others include Floriculture

(b) Geographical Segment: The Geographical segments considered for disclosure are as follows: - Revenue within India includes sales to customers located within India earnings in India - Revenue outside India includes sales to customers located outside India earnings outside India

24. end use of money raised by preferential issue of convertible warrants

Rs. LakhsProceeds of Issue 4545.00Utilisation:Repayment of Long Term debts 1500.00Meeting Working Capital requirements / repayment of loans 3045.00

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25. InCOMe FROM PROPeRTY DeveLOPMenT:

a) The Company in the previous year entered into “Development Agreements” with IDL Arom International Limited (wholly owned subsidiary upto 31st December 2006) towards sale of development rights in various properties owned by it for a consideration of Rs.300 lakhs (previous year Rs.2331 lakhs) which has been based on valuers report. IDL Arom would undertake construction on the aforesaid properties. Subsequent to the development of such properties, and at the time IDL Arom enters into agreements for sale with intending buyers on such terms and conditions as it may deem fit, the Company shall convey its right, title and interest in the said properties in favour of the intending buyers without further consideration.

b) The Company in the previous year entered into “Option for Development Rights”with Aasia Property Development Limited (APDL) wherein, APDL has only the right to decide whether or not to exercise the option to acquire the development rights in respect of certain properties of the Company located at Hyderabad and Bangalore. The offer of grant of the development rights in respect of the said properties by the Company was open upto 30th September 2007 and extended to 31st July 2008. In consideration of the company agreeing to keep such offer open APDL has paid an amount of Rs.300 lakhs (previous year Rs.1000 lakhs) as a non refundable commitment amount for extending the agreement. Further, if the option for development is exercised by APDL, a Development Agreement would be entered with the Company wherein, the Company shall be entitled to a share of the Gross Sale Proceeds (as determined in the agreement) realized from the sale of buildings constructed on the said properties.

The consideration received on entering into the above agreements aggregating to Rs.600 lakhs (Previous Year Rs.3337 lakhs) has been shown under “Income from Property Development” in the Profit and loss account.

26. Land meant for property development has been revalued as at 31st March, 2008 on current cost basis by approved valuers. The resultant surplus on such revaluation amounting to Rs.183896.69 lakhs has been credited to Revaluation Reserve.

27. Previous year’s figures have been regrouped / recast wherever necessary.


S. SUBRAMANIAN S. PRAMANIK S. G. HINDUJAPlace : MumbaiDate : May 24, 2008

Chief Financial Officer& Company Secretary


STATeMenT UnDeR SeCTIOn 212 OF THe COMPAnIeS ACT, 1956Rs. in Lakhs

Name of the Subsidiary Financial Year ending of the

Subsidiary

Number of shares

Extent of Holding

For the Financial years of the Subsidiary

For the previous Financial Years since it became a Subsidiary

Profits/(Losses) not dealt with in the

Books of Accounts of the Holding

Company (Except to the extent dealt

with in Col.6)

Profit/(Losses) dealt with in the


Company

Profits/(Losses) not dealt with in the


Company (Except to the extent dealt with in Col.6)

Profit/(Losses) dealt with in the


Company

(1) (2) (3) (4) (5) (6) (7) (8)

IDL AGRO CHEMICALS LIMITED 31.03.2008 240000 100% (9.21) Nil (113.48) Nil

IDL BUILDWARE LIMITED 31.03.2008 1970000 100% (34.45) Nil (212.75) Nil

GULF CARROSSERIE INDIA

LIMITED 31.03.2008 380001 95% (0.59) Nil (109.94) NilGULF OIL BANGLADESH LIMITED 31.03.2008 177939 51% (0.39) Nil (149.39) Nil

PT GULF OIL LUBRICANTS

INDONESIA

31.03.2008 15000 75% 1.43 Nil (266.59) Nil

GULF OIL (YANTAI) COMPANY LTD. 31.03.2008 4132540 51% (98.99) Nil (98.99) Nil



S. SUBRAMANIAN Chief Financial Officer & Company Secretary

S. PRAMANIKManaging Director

S. G. HINDUJAChairman

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SCHeDULe – 1 Information pursuant to Part IV of Schedule VI of the Companies Act, 1956BALAnCe SHeeT ABSTRACT & COMPAnY’S GeneRAL BUSIneSS PROFILeI. Registration Details

Registration No. State Code8 7 6 0 1

Balance Sheet Date3 1 . 0 3 . 0 8

II. Capital raised during the year: (Amount in Rs. thousands)Public Issue Rights Issue

N I L N I LBonus Issue Private placement

N I L 1 0 0 0 0

III. Position of Mobilization and Deployment of Funds: (Amount in Rs. thousands)

Total Liabilities Total Assets2 4 6 3 1 2 2 2 2 4 6 3 1 2 2 2

Sources of fundsPaid up Capital Reserves & Surplus

1 4 8 7 1 7 2 0 3 9 0 1 3 9Convertible Warrants Unsecured Loans

N I L 1 1 1 6 3 4 0Secured Loans Current Liabilities

1 3 4 5 7 7 2 1 6 3 0 2 5 4Application of fundsFixed Assets Investments

2 0 0 4 2 4 3 2 5 8 5 2 0 8Current Assets Deferred Tax Asset (Net)

3 8 8 9 4 9 7 4 6 9 4 7Accumulated Losses Misc. Expenditure

N I L 6 7 1 3 8Iv. Performance of Company: (Amount in Rs. thousands)

Turnover Total Expenditure8 7 2 3 4 1 2 8 4 2 6 3 5 2

Profit /Loss before Tax Profit /Loss after Tax2 9 7 0 6 0 2 5 1 3 1 7

Earning per Share (Rs.) Dividend Rate %3 . 4 2 7 5

v. General name of principal products/ services of Company (As per monetary terms)IDL DIvISIONS1. Ind Explosives Permitted Types 3 6 0 2 0 0 . 0 1

2. Other 3 6 0 2 0 0 . 0 9

3. Detonating Fuse 3 6 0 3 0 0 . 0 1

4. Detonators Containing and ExplosivesElectrically Ignited, Not-ordinance 3 6 0 3 0 0 . 1 1

5. Detonators, Plain Not-ordinance 3 6 0 3 0 0 . 1 2

6. Fresh (Cut Flowers) 0 6 0 3 1 3 . 1 1LUBRICANTS DIvISIONS7. Lubricating Oils 2 7 1 0 . 9 5

8. Brake Fluids 3 8 1 1 . 0 0

9. Coolant 3 8 1 9 . 0 0

10. 2T Oils 3 8 2 4 . 9 0SPECIALITY ChEMICALS DIvISION11. Bulk Drugs and Formulations 2 9 4 0 0 0 . 0 0

S. SUBRAMANIAN S. PRAMANIK S. G. HINDUJAPlace : Mumbai Date : May 24, 2008



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REPORT OF THE AuDITORS’ TO THE BOARD OF DIRECTORS OFGuLF OIL CORPORATION LIMITED

1. We have audited the attached consolidated balance sheet of GULF OIL Corporation Limited and its subsidiaries (‘the Group’) as at 31st March, 2008 and also the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date, annexed thereto, in which are incorporated the returns from branch, audited by other auditors. These financial statements are the responsibility of the management of GULF OIL Corporation Limited. Our responsibility is to express an opinion on these consolidated 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 did not audit the financial statements of certain subsidiaries, whose financial statements reflect Group’s share of total assets of Rs. 5613.56 lakhs, as at 31st March, 2008 and the Group’s share of total revenues of Rs. 5177.69 lakhs and net cash flows amounting to Rs. 498.85 lakhs for the year ended on that date as considered in the consolidated financial statements. These financial statements and other information have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries and associates, is based solely on the report of the other auditors.

4. We report that consolidated financial statements have been prepared by the management of GULF OIL Corporation Limited in accordance with the requirements of Accounting Standard 21, Consolidated Financial Statements, Accounting Standard 23, Accounting for Investments in Associates in Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.

5. Deferred tax asset (Note 9(ii) of Schedule 17) includes Rs.837 lakhs on account of carried forward business losses for reasons explained therein and in respect of which we are unable to form a view on the appropriateness of the same.

6. On the basis of the foregoing and the information and explanations given to us and on the consideration of separate audit reports on individual audited financial statements of GULF OIL Corporation Limited, its subsidiaries and associates, in our opinion, the consolidated financial statements subject to our comments in para 5 above give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the state of affairs of the Group as at 31st March, 2008;

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

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

For Deloitte Haskins & SellsChartered Accountants

K. RAjASekhARPlace : Mumbai PartnerDate : May 24, 2008 M.No. 23341

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CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008

Schedule

As at31st March 2008(Rupees Lakhs)

As at31st March 2007(Rupees Lakhs)

I. SOuRCES OF FuNDS1. Shareholders' Funds

(a) Capital 1 1487.17 1387.17 (b) Warrants Convertible to equity Shares - 505.00 (c) Reserves & Surplus 2 203011.36 12296.45

2044 98.53 14188.62 2. Minority Interests 1415.58 128.22 3. Loan Funds

(a) Secured Loans 3 13583.59 15721.91 (b) Unsecured Loans 4 11189.31 6304.69

24772.90 22026.60

TOTAL 230687.01 36343.44

II. APPLICATION OF FuNDS1. Goodwill on Consolidation 704.54 -

2. Fixed Assets(a) Gross Block 212364.43 25148.44 (b) Less : Depreciation 11370.88 9492.98 (c) Net Block 5 200993.55 15655.46 (d) Less: Lease Terminal Adjustment A/C 0.33 0.66 (e) Capital Work-in-Progress and advances on Capital

Account 1483.50 450.33 202476.72 16105.13

3. Investments 6 2514.38 4167.67 4. Deferred Tax Asset 596.30 373.88 5. Current Assets, Loans and Advances

(a) Inventories 7 12243.19 11015.28 (b) Sundry Debtors 8 16941.15 15309.98 (c) Cash and Bank Balances 9 4968.31 3374.19 (d) Loans and Advances 10 6943.92 4620.55

41096.57 34320.00 Less: Current Liabilities and Provisions

(a) Current Liabilities 11 14843.44 17881.38 (b) Provisions 12 2546.52 1824.15

17389.96 19705.53 Net Current Assets 23706.61 14614.47

6. Miscellaneous Expenditure 13 688.46 1082.29 (to the extent not written off or adjusted)TOTAL 230687.01 36343.44

Notes on the Accounts 17



K. RAjASekhAR S. SUbRAMANIAN S. PRAMANIK S. G. hINDUjAPartner




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CONSOLIDATED PROFIT & LOSS ACCOuNT FOR THE YEAR ENDED 31ST MARCH, 2008

Schedule



INCOMEIncome from sales and other operations 87175.95 68226.01Less: excise Duty 8621.01 6742.82Net Income from sales and other operations 78554.94 61483.19 Income from Property Development 600.00 1178.54 Profit on disinvestment in associate/subsidiary 1341.46 1226.66 Other Income 14 3310.18 295.09

83806.58 64183.48 EXPENDITuRE

Cost of Materials 15 42004.83 37195.51 expenses 16 35523.70 23492.52 Depreciation 1721.98 1073.99

79250.51 61762.02

PROFIT BEFORE EXCEPTIONAL ITEMS AND TAXATION 4556.07 2421.46 exceptional item Compensation under Voluntary Retirement Scheme

493.77 462.32

PROFIT BEFORE TAXATION 4062.30 1959.14 TAXATION Current Tax 350.00 356.07 Tax Provision of earlier years written back - (59.32) Deferred Tax 6.56 435.97 Fringe benefit Tax 113.47 121.07

PROFIT AFTER TAXATION 3592.27 1105.35 Share of loss from Associates - (42.36)

PROFIT AFTER TAXATION BEFORE MINORITY INTEREST 3592.27 1062.99 Share of Minority Interest 93.90 30.08

NET PROFIT 3686.17 1093.07 Pre-acquisition Loss on conversion of associate to subsidiary (8.61) -

3677.56 1093.07 balance brought forward from previous year 1692.08 2153.95

BALANCE AVAILABLE FOR APPROPRIATION 5369.64 3247.02 Proposed Dividend 1115.38 1115.38 Dividend Tax 189.56 189.56 Transfer to General Reserve 260.00 250.00 balance Carried to balance Sheet 3804.70 1692.08

earnings per share (Note 11) -Basic Rs. 5.01 Rs. 1.58 -Diluted Rs. 5.01 Rs. 1.50

Notes on the Accounts 17







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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

2007-2008 2006-2007Rupees

lakhsRupees

lakhsRupees

lakhsRupees

lakhs

(A) CASH FLOW FROM OPERATING ACTIVITIESNet Profit before tax and extraordinary items 4556.07 2421.46

Adjustments for:Depreciation 1721.98 1073.99 Dividend received (27.66) (1.42)Miscellaneous expenditure written off 48.82 29.10 Interest received (242.03) (132.40)Loss / (Profit) on sale of Fixed Assets (12.08) (76.54)Sale of Development Rights in Property (600.00) -Profit on sale of Property (1121.61) - Profit on sale of investment (1780.38) (0.73)Profit on disinvestment in subsidiary (1341.46) (1226.66)Interest expenses 2381.22 1883.68 Lease equalisation Charge (0.33) (1.31)Preliminary expenses written off - (973.53) 2.09 1549.80 Operating Profit/(Loss) before working Capital changes 3582.54 3971.26

Adjustments for:Trade and other Receivables - (Increase)/ Decrease (3333.03) (3671.66)Inventories - (Increase)/ Decrease (948.44) (1870.29)Trade Payables - Increase/(Decrease) (3260.68) 1105.53

(7542.15) (4436.42)expenditure incurred during the year towards camp site, compensation under Voluntary Retirement Scheme etc

(148.77)

(513.66)

Miscellaneous expenditure incurred during the yearCash generated from Operations (4108.38) (978.82)Direct Taxes paid (net of refunds) (480.50) (467.54)Interest paid (2351.81) (2832.31) (1922.74) (2390.28)Cash inflow/(outflow) before extraordinary / prior period items

(6940.68) (3369.10)

Foreign Currency Translation Reserve (arising on account of currency translation)

23.89 (4.89)

NET CASH INFLOW/(OuTFLOW) FROM OPERATING ACTIVITIES

(6916.80) (3373.99)

(B) CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (2565.07) (5402.38)Sale of Fixed Assets 31.57 145.38 Income from Property development 300.00 - Profit on sale of Property 1138.79 - Purchase of Investments - current - (1000.00)Sale/Redemption of investments - current 3836.94 1000.73 Purchase of interest in a Subsidiary / Associate (960.28) (951.31)Proceeds from disinvestment in subsidiary 32.00 483.31 Loans realised - 162.41 Interest received 242.03 132.40 Dividend received 27.66 1.42 NET CASH INFLOW/(uSED) IN INVESTING ACTIVITIES

2083.64 (5428.04)

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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008 (Contd.)

2007-2008 2006-2007

Rupees lakhs Rupees lakhs Rupees lakhs Rupees lakhs

(C) CASH FLOW FROM FINANCING ACTIVITIESProceeds from borrowings 14973.77 11707.20

Proceeds from Fixed Deposits (178.09) (173.71)

Repayment of borrowing (7964.32) (5042.75)

Share Premium Received 4447.45 -

Loans from Companies 500.00 7100.37

Repayment of Loans to Companies (4585.17) (2975.00)

Dividend paid (1103.48) (974.06)

Dividend tax paid (189.56) (136.19)

NET CASH INFLOW/(OuTFLOW) FROM FINANCIAL ACTIVITIES

5900.60 9505.87

Net increase/(decrease) in cash and cash equivalents

1067.44 703.84

Cash and Cash equivalents as at the commencement of

the year- Cash and Bank Balances 3374.19 2670.36

Cash and Cash equivalents on acquisition of subsidiary [see note below]

526.68 -

Cash and Cash equivalents as at the end of the year -

Cash and Bank Balances 4968.31 3374.19

Notes: Cash and Cash equivalents of Rs.526.68 Lakhs of Gulf Oil (Yantai) Co. Limited acquired consequent it becoming subsidiary of the Company.






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SCHEDuLES TO THE CONSOLIDATED ACCOuNTS


1. SHARE CAPITALAUThORISeD12,50,00,000 equity shares of Rs.2 each(Previous year 2,50,00,000 equity shares of RS. 10 each) 2500.00 2500.00 ISSUeD AND SUbSCRIbeD7,43,58,735 equity shares of Rs.2 each fully paid 1487.17 1387.17 (Previous year 1,38,71,747 equity shares of Rs.10 each fully paid up)

Of the above(a) 465025 shares represent 93005 shares after subdivision of shares

from Rs.10/- to Rs.2/- each during the year are allotted as fully paid pursuant to a contract without payment being received in cash

(b) 2,60,75,125 shares represent 52,15,025 shares after subdivision of shares from Rs.10/- to Rs.2/- each during the year are allotted as fully paid up bonus shares by capitalisation of Reserves.

(c) Pursuant to the merger scheme as approved by bIFR, 15,18,735 shares represent 3,03,747 shares after sub-division of shares from Rs.10/- to Rs.2/- each during the year have been allotted effective 31/03/1999 to the shareholders of IDL Salzbau (India) Limited.

(d) 2,93,50,000 represent 58,70,000 after sub-division of shares from Rs.10/- to Rs.2/- each during the year are allotted effective 1st january, 2002 consequent to the amalgamation of erstwhile Gulf Oil India Limited to the shareholders of erstwhile Gulf Oil India Limited

(e) 50,00,000 represent 10,00,000 shares after sub-division of shares from Rs.10/- to Rs.2/- each allotted during the year, Share warrants issued in the earlier year have been converted into shares

1A ScheduleWARRANTS CONVERTIBLE TO EQuITY SHARES

10,00,000 warrants, Rs.50.50 paid for each warrant as application money - 505.00

each warrant is convertible into one equity Share of Rs.10 at a price of Rs.505 (including Rs.10 face value), in one or more trenches on or before the expiry of 18 months from the date of allotment I.e. 15 December, 2005 by paying the balance amount

2. RESERVES AND SuRPLuS Capital Reserve on Consolidation At commencement of the year 0.03 11.55

Add: On increase in Group’s interest

Less: On decrease in Group’s interest - 11.52

0.03 0.03

CAPITAL RESERVE At commencement of the year 8.25 8.25

SECuRITIES PREMIuM ACCOuNT 4852.45 -

Received during the year

EXPORT ALLOWANCE RESERVE At commencement of the year 10.50 10.50

REVALuATION RESERVE (refer Note 17) 183896.69 -

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2. RESERVES AND SuRPLuS (Contd.)GENERAL RESERVE At commencement of the year 10524.21 10274.21 Add: Transfer from Debenture Redemption Reserve - - Add: Transfer from Profit and Loss Account 260.00 250.00 Less: Adjustment on account of initial adoption of Accounting Standard 15 (Revised) on employee benefits (Refer Note 15 on Schedule 17) 444.69 -

10339.52 10524.21 Foreign Currency Translation Reserve At commencement of the year 61.38 63.26 Add: for the year 37.84 (1.88)

99.22 61.38 PROFIT AND LOSS ACCOuNT

As Per Account Annexed 3804.70 1692.08 203011.36 12296.45

3. SECuRED LOANSA. From Banks

(i) Cash Credit (includes Working Capital Demand Loan) 4219.91 6893.19 (ii) Bank overdraft 121.40 337.00 (iii) Foreign Currency Working Capital Loan 829.34 -(iv) Term Loans (a) eXIM bank - 666.67 (b) Syndicate bank - 933.23 (c) State bank India 2822.36 2969.61 (d) State bank of hyderabad 2467.00 1730.89 (e) Oriental Bank of Commerce 352.00 448.81 (f) ABN Amro Bank 1543.29 1352.35 (g) Andhra Bank 284.09 -

B. Other LoansSReI Infrastructure Finance Limited 944.20 387.70 Indian Renewable energy Development Authority - 2.46

13583.59 15721.91

4. uNSECuRED LOANSFixed Deposits [See note 5(f)](interest accrued and due Rs. 6.92 lakhs; 31.03.07 Rs.2.44 lakhs) 312.67 490.76 Deferred hire Purchase Credits 449.68 291.11 ICICI Bank 650.48 982.95 Sales Tax deferment 15.71 33.19 Lease Obligations - 9.51 Short term:

Buyers credit 9365.72 -Dealers' deposits 79.85 96.80 Inter Corporate Loans 315.20 4400.37

11189.31 6304.69

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5. F

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of G

ulf O

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bsid

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E C

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SO

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ATE

D A

CC

Ou

NTS

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6. INVESTMENTSAt cost, unless otherwise stated

LONG TERMQuOTED

NON - TRADe

Ashok Leyland Limited1,00,000 equity Shares of Re.1 each

24.23 24.23

hinduja TMT Limited96 equity shares of Rs. 10 each

0.06 0.06

Jammu & Kashmir Bank Ltd.2,400 equity Shares of Rs.10 each

0.91 0.91

Indusind Bank Limited14,623 (Previous year 43,14,623) equity Shares of Rs. 10 each fully paid

7.11 2063.67

uNQuOTED - LONG TERM TRADE - In Associates

IDL Arom International Limited58,803 equity Shares of Rs. 10 each cost of acquisitionAdd: Group's share of Profit upto 31.03.2008

---

5.901.006.90

23,62,000(Previous year 20,62,000)10% Redeemable Cumulative Preference Shares of Rs. 100 each 2362.00

2362.002062.002068.90

Less: Unrealised profit on sale of property development rights

- 2362.00 (1316.36) 752.54

Gulf Oil (Yantai) Co. LimitedPrevious year 27,55,030 equity shares of US $ 1 each(including goodwill of Rs.450.55 lakhs)Less: Group's share of loss upto 31.03.2007

--

-

1245.26

39.07 1206.19

uNQuOTEDNON - TRADe

500 Shares of Rs.10 each inIDL Chemicals employees' Co-operativeCredit Society Limited, hyderabad

0.05 0.05

500 Shares of Rs.10 each inIDL Chemicals employees' Co-operativeCredit Society Limited, Rourkela

0.05 0.05

27,978 units of Rs.10 each inUTI Bond Fund of Unit Trust of India

2.97 2.97

Gulf Ashley Motors Limited1,14,000 equity Shares of Rs.100 each

114.00 114.00

Patancheru enviro-Tech Limited58,460 equity Shares of 10 each

3.00 3.00

2514.38 4167.67

Notes:1. Aggregate Carrying cost of quoted investments 32.31 2088.87 2. Aggregate Market Value of quoted investments 63.42 1864.61 3. Aggregate cost of unquoted investments 2482.07 2078.80

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7. INVENTORIES

(At lower of cost and net realisable value)

Land / building for Property development, at cost 47.87 62.06 Stores & Spares 392.39 252.18 Packing Materials and Fuel 365.93 225.66 Raw Materials 4998.38 5340.23 Work-in-Process 1526.88 686.29 Finished Goods 4538.19 3950.78 excise Duty on Finished Goods 373.55 498.08

12243.19 11015.28

8. SuNDRY DEBTORS - uNSECuRED

(a) Debts outstanding for a period exceeding six months:Considered good 2928.27 2170.57

Considered doubtful 2317.27 1811.13

(b) Other Debts :Considered good 14012.88 13139.41

19258.42 17121.11 Less : Provision for doubtful debts 2317.27 1811.13

16941.15 15309.98

9. CASH AND BANK BALANCESCash/Cheques on hand 594.94 898.26 With Scheduled banks : Current Account 2105.77 1321.02 Fixed Deposits/Margin account 2267.60 1154.91

4968.31 3374.19

10. LOANS AND ADVANCES (Unsecured, considered good unless otherwise specified)

Advance Tax (net of Provisions) 37.07 1.67 Advances recoverable in cash or in kind or for value to be received:

Considered good 5132.44 3048.42 Considered doubtful 65.78 65.78

5198.22 3114.20 Less : Provision for doubtful advances 65.78 65.78

5132.44 3048.42 balance with excise Authorities on Current Account 1774.41 1570.46

6943.92 4620.55

11. CuRRENT LIABILITIESAcceptances 877.30 4192.96

Sundry Creditors 13835.74 13599.33

Interest accrued but not due 82.53 53.12

Unpaid/Unclaimed Dividends 47.87 35.97

14843.44 17881.38

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12. PROVISIONS Provision for Fringe benefit Tax 29.64 25.24 Proposed dividend 1115.38 1115.38 Tax on dividend 189.56 189.56 Miscellaneous - Leave encashment 231.28 130.16 - Gratuity 980.66 363.81

2546.52 1824.15 13. MISCELLANEOuS EXPENDITuRE (to the extent not written off or adjusted) Payments under Voluntary Retirement Scheme 610.58 1010.01 Deferred Revenue expenses 17.08 38.47 Camp site expenditure 60.80 33.81

688.46 1082.29

Year ended Year ended31st March 2008 31st March 2007(Rupees Lakhs) (Rupees Lakhs)

14. OTHER INCOMEDividend 27.66 1.42 - Other Investments - -Profit on sale of Property 1121.61 Profit/(loss) on Sale/Scrap of other Fixed Assets 12.08 76.54 Profit on sale of investments - Long term 1780.38 -Profit on sale of Investments - Current - 0.73 Insurance Claims 59.06 56.30 export Incentives (DePb) 32.17 105.07 Miscellaneous 277.22 55.03

3310.18 295.09 15. COST OF MATERIALS

Raw Materials Consumed :Opening Stock 5340.23 3912.78 On acquisition of subsidiary during the year 162.93 -Add : Purchase 35014.51 30601.85

40517.67 34514.63 Less : Closing Stock 4722.64 5340.23

35795.03 29174.40 Purchase of Finished Goods 5206.47 6488.24 (Increase)/Decrease in Finished Goods andWork-in-Process:Closing Stock Finished Goods 4814.62 3950.78 Work-in-Process 1526.88 686.29

6341.50 4637.07 Opening Stock : Finished Goods 3950.78 3127.33 Work-in-Process 686.29 363.38 Closing Stock of trial run production - 388.79 On acquisition of subsidiary during the year 83.24 -

4720.31 3879.50(1621.19) (757.57)

Packing Materials Consumed 2735.73 2422.14 42116.04 37327.21

Less: Scrap realisation 111.21 131.70 42004.83 37195.51

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Year ended Year ended31st March 2008 31st March 2007(Rupees Lakhs) (Rupees Lakhs)

16. EXPENSESPayments to and provisions for employees :Salaries, Wages and bonus 5079.76 4067.90 Contribution to Provident Fund, GratuityFund and other Funds 521.59 489.89 Workmen and Staff Welfare expenses 478.39 476.76

6079.74 5034.55 Interest expense: On Debentures and Fixed Loans 1293.14 959.00 Other 1088.08 924.68

2381.22 1883.68 Less: Interest Income (Gross): (Tax deducted at source Rs.25.06 Lakhs; Previous year Rs.24.52 Lakhs) - On deposits, income-tax refunds, loans to employees 242.03 132.40

2139.19 1751.28 Stores, Spare Parts and Loose Tools consumed 383.09 182.01 Processing Charges 755.19 663.11 Power, Fuel and Water 1132.40 809.68 Rent 896.04 374.76 Rates and Taxes 635.82 202.53 expenses on Operation Contracts 9516.99 3909.73 Insurance 243.31 237.03 Advertising 1739.41 926.38 Distribution expenses 3024.56 2470.26 Commission on Sales 246.36 136.56 Discount on Sales 4198.83 3572.76 Repairs to buildings 53.85 40.91 Repairs to Machinery 198.66 117.81 Travelling expenses 681.64 592.96 bank charges and other Financial charges 433.22 490.98 Directors' Fees 64.65 10.44 Commission to non- wholetime Directors 2.62 7.97 Postage, Telephone and Telex 195.65 190.63 Agriculture & Farm Maintenance 17.59 23.04 Legal & Professional charges 494.89 285.40 Loss on sale of assets 6.46 Provision for doubtful debts 506.15 322.74 bad Debts, advances etc written off - - 307.84 -Less: Provision for doubtful debts written-back - - 307.84 -Miscellaneous expenditure written off :Deferred Revenue expenses 48.82 25.05 Software expenditure - 4.05 Preliminary expenses - 2.09 Royalty 449.85 300.01 Miscellaneous 1378.72 807.80

35523.70 23492.52

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17. NOTES ON THE ACCOuNTS FOR THE YEAR ENDED 31ST MARCH, 2008

1 (a) The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21)- “Consolidated Financial Statements”, Accounting Standard 23 (AS 23) “Accounting for Investments in Associates in Consolidated Financial Statements” issued by The Institute of Chartered Accountants of India.

(b) The subsidiaries (which along with Gulf Oil Corporation Limited, the parent, constitute the Group) considered in the preparation of these consolidated financial statements are :

Name Country of Incorporation

Percentage of ownership interest as

at 31st March 2008


at 31st March 2007IDL buildware Limited India 100.00 100.00IDL Agro Chemicals Limited India 100.00 100.00

Gulf Carosserie India Limited India 95.00 95.00Gulf Oil bangladesh Limited bangladesh 51.00 51.00PT Gulf Oil Lubricants Indonesia Indonesia 75.00 75.00Gulf Oil (Yantai) Co. Limited (had become a subsidiary from 18th October, 2007).

China 51.02 -

(c) Investments in Associates are:

Name Country of Incorporation


at 31st March 2008


at 31st March 2007IDL Arom International Limited ( Upto 27th June, 2007)

India - 48.99%

Gulf Oil (Yantai) Co. Limited (Upto 17th October, 2007)

China - 34.01%

2. ACCOuNTING POLICIES The accounts have been prepared primarily on the historical cost convention and in accordance with the mandatory

accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. Financial Statements of three foreign subsidiaries, prepared in accordance with the Accounting Standards of those countries have been recast for the purpose of consolidation with the Indian Parent. The significant accounting policies followed by the Group are stated below:

I. FIXED ASSETS: Fixed assets are shown at cost less depreciation. Cost comprises purchase price and other attributable

expenses.

II. DEPRECIATION ON FIXED ASSETS: (i ) The Group, except Gulf Oil bangladesh Limited and P.T.Gulf Oil Lubricants Indonesia and Gulf Oil (Yantai)

Co. Limited follows the straight line method of charging depreciation on all its fixed assets. Depreciation has been provided in the manner and at the rates prescribed in Schedule XIV to the Companies Act, 1956 on all the assets except certain equipments which are depreciated over their estimated useful life. In respect of Gulf Oil bangladesh Limited, depreciation has been provided using straight line method over the useful lives of the assets as summarized below :

Plant and Machinery

Office equipment 10 Years

Computer/Computer software 4 Years

Vehicles 5 Years

Furniture and Fixtures 10 Years

In respect of P.T.Gulf Oil Lubricants, Indonesia, depreciation on furniture and equipment have been computed on a straight-line method, based on the estimated useful life of the related assets, for 4 years or at the rates of 25% p.a.

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In respect of Gulf Oil (Yantai) Co., Limited, depreciation of fixed assets is calculated to write off the cost of fixed assets less 10% residual value on a straight-line basis over their anticipated useful lives. The respective anticipated useful lives of fixed assets are as follows:

Machinery and equipment 10 yearsOffice and other equipment 5 yearsMotor vehicles 5 years

No depreciation is provided in respect of construction in progress.

(ii) Leasehold land is being amortised in equal installments over the lease period.

(iii) Technical know-how is being amortised over a period of five to seven years.

III. INVESTMENTS:

Current Investments are valued at lower of cost and fair value, Long Term Investments are valued at cost. Where applicable, provision is made where there is a permanent fall in valuation of Long Term Investments.

IV. INVENTORIES:

Inventories are valued at lower of cost and net realisable value. The method of arriving at cost of various categories of inventories is as below:

(a) Stores and Spares, Raw and Packing material.

First – In – First – Out method / Weighted average method.

(b) Finished goods and work- in-process Weighted average cost of production, which comprises direct material costs, direct wages and appropriate overheads.

V. SuNDRY DEBTORS AND ADVANCES:

Specific debts and advances identified as irrecoverable or doubtful are written off or provided for respectively.

VI. FOREIGN EXCHANGE TRANSACTIONS:

Transactions made during the year in foreign currency are recorded at the exchange rate prevailing at the time of transaction. Assets and Liabilities related to foreign currency transactions remaining unsettled at the year end are translated at the contract rates, when covered by forward cover contracts and at year-end rate in other cases. Realised gains and losses on foreign exchange transactions other than those relating to fixed assets are recognised in the profit and loss account. Upto 31st March 2007 Gain/loss on transaction of long term liabilities incurred to acquire fixed assets is treated as an adjustment to the carrying cost of fixed assets.

exchange differences arising on account of the assets or liabilities and income or expenditure of non-integral foreign operations are recorded in foreign currency translation reserve.

VII. REVENuE RECOGNITION:

(a) Sale of goods is recognised at the point of dispatch of finished goods to customers. Sales include amount recovered towards excise duty but exclude sales tax. export incentive under the Duty entitlement Pass book scheme has been recognized on the basis of credits afforded in the passbook.

(b) Income from services is recognised at the time of rendering the services.

(c) Dividend income from investment is recognised when the owner’s right to receive payment is established.

(d) Income from property development is recognised as soon as the contract is entered with the party and the consideration is received.

VIII. RESEARCH AND DEVELOPMENT EXPENSES:

Research and Development expenditure of revenue nature is written off in the year in which it is incurred and expenditure of a capital nature is added to fixed assets.

IX. EMPLOYEE RETIREMENT BENEFITS:

Retirement benefits to employees are provided for by means of gratuity, superannuation and provident fund.

The gratuity liability is determined based on the actuarial valuation by an approved actuary.


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Payments in respect of superannuation are made to the fund administered by LIC. Provision in respect of leave encashment is made based on actuarial valuation as at year end.

X. TAXES ON INCOME: Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or subsequent periods.

XI. SEGMENT REPORTING: The accounting policy adopted for Segment Reporting is in line with the accounting policy of the group with the

following additional policy for Segment Reporting:-

Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to the segments on a reasonable basis, have been included under “Unallocated expenses”. Inter Segment transfers are at cost.

XII. MISCELLANEOuS: (a) Deferred revenue expenses are written off over the expected period of future benefits.

(b) Payments under the Voluntary Retirement Scheme are written off over a period of five/four/three years from settlement date until the period ending 31st March 2010, whichever is earlier.

(c) Preliminary expenses are written off over a period of five/ten years.

(d) Camp site expenditure; i.e., expenditure on setting up camps for execution of Operation contracts is written off over the period of the contract.

3. MANAGERIAL REMuNERATION

2007-08 2006-07Rs. Lakhs Rs. Lakhs

Salaries 34.53 30.72Commission 2.62 7.97 Contribution to Provident Fund and Superannuation Fund 5.83 5.18benefits 2.28 3.16Commission to non-whole time Directors 2.62 7.97 47.88 55.00

Note : having regard to the fact that there is a global contribution to Gratuity Fund, the amount applicable to an

individual employee is not ascertainable and accordingly, contribution to Gratuity Fund has not been considered in the above computation.

4. CONTINGENT LIABILITIES

As at As at31st March 2008 31st March 2007

Rs. Lakhs Rs. Lakhs

(a) Corporate Guarantees 349.02 390.00(b) Bills Discounted 277.84 77.64(c) Claims against the Company not acknowledged as debts hence

not provided

(i) Income Tax Demands 34.93 552.99(ii) Sales Tax Demands 3219.89 1787.93(iii) excise Demands 479.01 190.93(iv) Additional Demands towards cost of land 3.81 3.81(v) Claims of workmen/ex-employees 79.40 97.13(vi) Other Matters 613.06 347.82


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5. Capital Commitments

2007-08Rs. Lakhs

2006-07Rs. Lakhs

estimated amount of contracts remaining to be executed on capital account

55.23 0.52

6. SECuRED LOANS:

(a) Loans from banks on Cash Credit account including foreign currency demand loan from bank of bahrain & kuwait b.S.C is secured by hypothecation of all current assets of the Company including raw materials, finished goods, stocks-in-process, Stores and Spares (not relating to Plant & Machinery) and present and future book debts of the Company and by a second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company both present and proposed ranking, pari-passu with other working capital lenders.

(b) The term loans from State bank of India is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and by hypothecation of Raw materials, finished goods, stock in process, Stores & Spares and receivables of the Company ranking pari-passu with other working capital lenders and is further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company both present and proposed ranking, pari-passu with other working capital lenders.

(c) The Term loan from State bank of hyderabad is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company, present and future.

(d) The Term loan from Oriental bank of Commerce is secured by first charge on the fixed assets created out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company, present and future.

(e) The Term loan from Andhra bank is secured by first charge on the fixed assets out of the loan ranking pari-passu with other term lenders and hypothecation of raw materials, finished goods, stock in process, stores & spares and receivables ranking pari-passu with other working capital lenders and further secured by second charge on land owned by the Company situated at hyderabad, buildings and fixed assets of the Company, present and future.

(f) Fixed Deposits to the extent of Rs 284.57 Lakhs were secured by a second charge on all tangible movable property and fixed assets including all movable machinery and plant,machinery,spares and stores, tools and accessories and other movables both present and future as approved by the Controller of Capital Issues vide his letter dated 1st November,1980.

(g) Term Loans from AbN Amro bank NV and SReI Infrastructure Finance Limited are secured by way of first charge on specific mining equipment of the Company.

(h) Cash Credit from Andhra bank is secured by hypothecation on all the movable assets and existing and future crops and orchards, a lien on deposit of title deeds for land admeasuring 9.29 acres of IDL Agro Chemicals Limited, a subsidiary.

(i) In respect of Gulf Oil bangladesh Limited, one of the subsidiaries, cash credit/overdraft facilities from the banks are secured by hypothecation of imported goods and stocks of finished products, first charge on fixed and floating assets of the aforesaid company and lien on duly discharged fixed deposit receipts.

7. Orissa Sales Tax Case

1. In respect of taxability under the Central Sales Tax Act. 1956, of stock transfers from Rourkela Unit to its consignment agents outside the State of Orissa, the amount deposited under protest by the Parent Company with the Orissa Sales Tax authorities in respect of this matter stands at Rs. 150.17 Lakhs as on 31st March 2008 and the said deposit is included under Loans and Advances (Schedule 10).


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2. The hon’ble high court of Orissa vide it’s Order dated 11th April 2006, held that such stock transfers constituted inter-state sales and in respect of which the Parent Company filed special Leave Petition in the hon’ble Supreme Court of India. The hon’ble Supreme Court vide its Order dated 16.11.2007, held that the stock transfers constituted inter state sale in respect of 10 years assessment years viz. 1976-77 to 1983-84, 1989-90 & 1990-91 and also directed the authorities to examine the factual aspects and assess tax on the supplies made by the Parent Company to the subsidiaries of M/s.Coal India Limited as inter state sale. The Parent Company’s review petition filed in the hon’ble Supreme Court against the above Order was dismissed on 11.03.2008.

The Orissa commercial tax authorities served tax re-computation orders relating to the assessment years 1976-77 to 1983-84 demanding Rs. 401.00 lakhs. The Parent Company has contested the same and has filed a writ petition in the hon’ble Orissa high Court challenging the demand since the assessment procedures required to be carried out in accordance with the Order of the hon’ble Supreme Court Order had not been complied with.

The Parent Company has been advised by eminent counsel that as local sales tax has already been paid on such ‘inter-state sales’ to States other than the State of Orissa, such tax should be refunded by the other States as it has been wrongly subjected to tax.

3. The Parent Company has also received demands aggregating to Rs.809.79 lakhs from Commissioner of Commercial Taxes in respect of assessment year 1984-85 through 1987-88 which has been contested and a stay for payment of the demand has been granted by the hon’ble high Court of Orissa.

4. Further, in the previous years the Parent Company had received various demands aggregating to Rs.1294.08 lakhs from the Assistant Commissioner, Sales Tax, Rourkela through appeal orders in respect of assessment year 1994-95, 1995-96 and 1998-99 treating the stock transfers to various branches/consignment agents of the Parent Company as sales under Central Sales Tax. The Parent Company has filed petition in the hon’ble high Court of Orissa, Cuttak for full stay of the demand of Asst. Commissioner of Sales Tax Rourkela since in earlier assessment years on the similar cases hon’ble high Court has decided the matter in favour of the Parent Company. The hon’ble high Court of Orissa has granted full stay for payment of Sales Tax demands till the disposal of Parent Company’s Appeal filed before Orissa Sales Tax Tribunal.

5. The Parent Company is of the opinion that in view of the foregoing no provision is required to be made on this account.

8. FIXED ASSETS

buildings include:

(i) Rs.7.09 lakhs, which represents the cost of ownership flats Rs.7.08 lakhs and Rs.0.01 lakhs being the value of Share money in Sett Minar Co-operative housing Society Limited.

(ii) Rs.4.70 lakhs, which represents the cost of ownership flats Rs. 4.43 lakhs and Rs.0.27 lakhs being the value of 270 ordinary shares of Rs.100 each, fully paid up in Shree Nirmal Commercial Limited.

9. TAXATION

(i) Pursuant to the scheme of merger with IDL Salzbau (India) Limited (ISIL) sanctioned by the bIFR, the Parent Company has considered the tax losses of Rs. 1498.36 lakhs allowable upto 31st March, 1999 in computing the Parent Company’s income for the year ended 31st March, 1999 giving a tax benefit of Rs. 524.43 lakhs in that year. however, the tax losses and tax benefits thereon do not include funded interest accrued on the loans taken by ISIL from the Financial Institutions as the tax benefit on such interest shall accrue to the Parent Company as and when the interest is paid to the Financial Institutions.

(ii) Pursuant to the Scheme of Amalgamation of erstwhile Gulf Oil (India) Limited with the Parent Company, brought forward tax losses of Rs 3462.77 lakhs as at 31st December ,2001 have been considered in computing the Parent Company’s tax liabilities for the year 2001-02 and an amount of Rs.1236.24 lakhs was considered as deferred tax asset. In view of insufficient taxable income in subsequent years till 31st March 2008, the Parent Company is not able to utilize the deferred tax asset. The management is confident that the Parent Company would be in a position to make adequate profits in future and would realize the deferred tax asset of Rs.837 lakhs being carried forward on 31st March, 2008.


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(iii) Deferred tax: - Net

31st March 2008Rs. Lakhs

31st March 2007Rs. Lakhs

(a) Deferred tax assets arising on account of timing differences:

Unabsorbed business loss/depreciation # 947.73 1126.75

Provision for doubtful debts/advances 794.62 625.05

Other timing differences 512.67 185.262255.02 1937.06

(b) Deferred tax liabilities arising on account of timing differences:

Depreciation 1655.63 1563.18

Other timing differences 3.09 -1658.72 1563.16

Deferred tax asset (net) 596.30 373.88

# Rs. 837 Lakhs relates to erstwhile Gulf Oil India Limited. In view of the Parent Company’s future profit projections the Company expects to fully realise the deferred tax asset.

(iv) In view of losses incurred by IDL buildware Limited (formerly IDL Finance Limited) one of the subsidiaries and no taxable income in the current year, the aforesaid Company has not recorded the deferred tax liability as on 31st March 2008 arising on account of timing differences-depreciation amounting to Rs.98.11 lakhs (Previous year Rs.117 lakhs) as stipulated in Accounting Standard-22 “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India. Deferred tax liability/asset shall be provided in the books in the year the aforesaid Company starts making profits and is liable to tax.

10. MISCELLANEOuS:

(a) “Sundry Debtors – Debts outstanding for a period exceeding six months, Considered good”, include

(i) Rs. 345.89 lakhs (net of provision) due from certain customers of the Parent Company which are outstanding from earlier years against some of whom the Parent Company has initiated appropriate legal proceedings and is hopeful of recovering the dues in full; pending finalisation in this matter, no provision has been considered necessary for this amount.

(ii) Rs. 149.80 lakhs in respect of subsidiary companies, which are outstanding from earlier years. In respect of these debts, appropriate legal proceedings have been initiated for recovery of the amounts, and subsidiaries are hopeful of recovering the debts in full; pending finalisation in this matter, no provision has been considered necessary for the amount.

(b) Loans and Advances of IDL buildware Limited (formerly IDL Finance Limited) one of the subsidiaries include Rs.18.85 lakhs (previous year Rs. 5.76 lakhs) due from certain parties, which are outstanding from earlier years. The aforesaid Company is hopeful of recovering the dues in full and no provision has been considered necessary for this amount.

(c) The net exchange gain / loss, (i.e., difference between the spot rate on the dates of the transactions and the actual rate at which the transactions are settled/appropriate rates applicable at the year end) credited to Profit & Loss Account is Rs. 223.45 Lakhs (Previous Year Rs.153.45 Lakhs Debited to Profit & Loss Account).

(d) exchange difference in respect of forward exchange contracts to be recognised in the Profit and Loss Account in the subsequent accounting period is Rs. 8.65 Lakhs Credit (Previous year Rs. 1.12 Lakhs)

(e) Gulf Carosserie India Limited one of the subsidiaries had entered into collaboration agreement with SIPAL, Arexons Spa, Italy, in terms of which it was agreed by the said collaborator to subscribe to 20% of the Capital of the Company for which a sum of Rs.10,00,000 had been received as share application money pending the final approval of the Reserve bank of India. As the final approval of the Reserve bank of India has not been forthcoming, the Company has decided to repay/remit the said amount with required approvals and till that time to consider the said share application money as current liability.

(f) IDL buildware Limited (formerly IDL Finance Ltd.) one of the subsidiaries had applied to the Reserve bank of India vide its application dated: 1st july, 1997 seeking a certificate of registration to carry on the business of a


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Non banking Financial Institution as required under Section 45-IA of the Reserve bank of India Act, 1934. The Company’s application was rejected by the Reserve bank of India vide its order dated 31st October, 2001. The Company has received a letter No. DbNS.(h) No.5874/04.08.081/2001-2002 dated 26th December, 2001 from the Reserve bank of India directing the Company to ensure that within a period of three years from the date of the letter i.e.26th December, 2001, the financial assets of the Company are disposed off and the Company is converted into a Non banking Non Finance Company or is wound up. Accordingly, the aforesaid Company has taken steps to enter into manufacturing activity, amended its object clause and discontinued the non banking financial business by deleting the non banking financial business clauses in Memorandum of Association.

(g) The financial statements of Gulf Oil bangladesh Limited, one of the subsidiaries, have been prepared on a going concern basis notwithstanding accumulated loss of Rs. 172.22 lakhs and a negative networth of Rs. 70.87 lakhs as at 31st March, 2008.

(h) The notes to accounts of IDL Agro Chemicals Limited, a subsidiary state that: Though the accumulated losses of the Company as at 31st March, 2008 exceed the paid up Share Capital and Reserves the financial statements of the Company has been prepared on a going concern basis. The Company has a negative networth of Rs. 81.97 lakhs.

11. EARNINGS PER SHARE



a. Profit after Tax (Rs. Lakhs) 3686.17 1093.07

b. Weighted average number of equity shares outstanding during the year 73544527 69358735

c. Potential equity shares on conversion of share warrants - 3246705

d. Weighted Average number of equity shares in computing diluted earnings per share 73544527 72605440

e. Face value of each equity Share (Rs.) 2 2

f. earnings per Share

-Basic (Rs.) 5.01 1.58

-Diluted (Rs.) 5.01 1.50

Pursuant to the approval of Shareholders, equity share of face value of Rs. 10/- each of the Parent Company have been sub-divided into five equity shares of Rs. 2/- each with effect from 2nd November, 2007.

12. RELATED PARTY DISCLOSuRES:

Information relating to Related Party Transactions as per “Accounting Standard 18” issued by the Institute of Chartered Accountants of India.

(A) Name of the Related Party Relationship

Gulf Oil (Yantai) Co. Limited

IDL Arom International Limited

Gulf Oil International (Mauritius) Inc.

N N Investments BV, Netherlands

Associate till 17th October, 2007Associate till 27th June, 2007entity holding more than 20% shareholding in the Company

entity holding more than 20% shareholding in the Company till 13th September, 2007

Mr. S. Pramanik, Managing Director key Management Personnel


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(b) Details of transactions between the Company and Related Parties and the status of outstanding balances at the year end:

Rs. LakhsParticulars Associates Entity holding

more than 20% of the shareholding in the company

Key Management Personnel

2007-08 2006-07 2007-08 2006-07 2007-08 2006-07

Royalty Gulf Oil Mauritius - - 440.22 300.01 - - Advances given IDL Arom International Ltd., - 33.67 - - - - Investment in Preference Shares IDL Arom International Ltd., - 350.00 - - - -Investment in Equity shares Gulf Oil Yantai Co. Ltd., - 1245.26 - - - - Rights in Property IDL Arom International Ltd., 300.00 350.00 - - - -Dividend paid Gulf Oil International (Mauritius) Inc. - - 510.07 201.25 - -NN Investments B V, Netherlands - - - 274.82 - - Mr. S. Pramanik - - - - 0.04 0.07Directors’ Remuneration - - - - 45.26 47.03Outstanding balances: (a) Receivables IDL Arom International Ltd., - 40.12 - - - -(b) Payables Gulf Oil International (Mauritius) Inc. - - 374.19 255.01 - -

13. DISCLOSuRE AS REQuIRED BY ACCOuNTING STANDARD 19, “LEASES” ISSuED BY THE INSTITuTE OF CHARTERED ACCOuNTANTS OF INDIA ARE GIVEN BELOW:

a) Operating Lease:

a. Where the Company is a Lessee:

i) The Parent Company’s significant leasing arrangements are in respect of operating leases for premises (residences, office, storage godowns for finished goods etc.). The leasing arrangements, which are not non-cancellable range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are charged as rent in the Profit and Loss Account.

ii) The company has taken certain Plant and Machinery under non-cancellable leases. Rs. Lakhs

31st March 2008 31st March 2007


year



Total Payments not later

than one year



Total of future minimum payments at the balance sheet date 5296.81 1218.89 4077.92 3085.15 638.84 2446.31

Lease Rent charged to Profit & Loss account for the year is amounting to Rs. 635.99 lakhs [Previous year Rs. 116.61 Lakhs].


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b. Where the Company is Lessor:

Details in respect of assets given on operating lease: Rs.Lakhs

Gross Block Accumulated Depreciation as on

Depreciation for the year

31-3-2008 31-3-2007 31-3-2008 31-3-2007 2007-08 2006-07building 30.17 30.17 10.30 9.85 0.45 0.45Plant & Machinery 80.32 80.32 46.94 43.02 3.82 3.82

The assets given on lease are not non-cancellable and range between 11 months to 5 years generally and are usually renewable by mutual consent, on mutually agreeable terms. The aggregate lease rentals are recognised as income from property in the Profit & Loss account.

Initial direct costs are recognised as an expense in the year in which these are incurred.

c) hire Purchase:

(i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term.

(ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value:

Rs. Lakhs31st March 2008 31st March 2007


year



Total Payments not later

than one year


but not later than five

yearsTotal of minimum hire purchase payments at the balance sheet date 497.70 258.46 239.24 328.04 141.91 186.13Less: Future Finance Charges 48.02 33.52 14.50 36.93 22.27 14.66Present value of minimum hire purchase payments at the balance sheet date 449.68 224.94 224.74 291.11 119.64 171.47

d) Finance Lease:

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as Finance Lease. Fixed Assets acquired by way of Finance Lease are stated at amount equal to the lower of its fair value and the present value of the minimum lease payments at the inception of the lease less accumulated depreciation and impairment loss.

(i) Particulars of Lease payments made during the year: Rs. Lakhs

Particulars 2007-08 2006-07Principal 9.21 10.45Lease Finance Charges 0.30 2.61

(ii) The break up of minimum lease payments outstanding at the balance sheet date is as under: Rs.Lakhs

Particulars 31st March 2008 31st March 2007Lease

PaymentsPrincipal Interest Lease

PaymentsPrincipal Interest

Payable within one year - - - 9.51 9.21 0.30Payable after one year but within five years - - - - - -Total 9.51 9.21 0.30


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(ii) Information about Secondary business Segments Rs. Lakhs

India Outside India Total

2008 2007 2008 2007 2008 2007

Revenue by Geographical market on FOb basis 75953.78 59176.41 7852.80 5007.07 83806.58 64183.48

Inter Segment - - - - - -

Total 75953.78 59176.41 7852.80 5007.07 83806.58 64183.48

Carrying amount of segment assets 241650.71 55561.09 6426.26 2051.06 248076.97 57612.15

Additions to Fixed Assets 2510.88 5416.18 18.80 0.29 2529.68 5416.47

(iii) Notes;

(a) Business Segment:

The Group has considered business segment as the primary segment for disclosure

Segments have identified and reported taking into account the organisation structure, the nature of products and services, the deferring risks and returns of the segments

The business segments of the Group are (i) explosives, (ii) Consult dealing in Mining & Infrastructure Contracts, (iii) Speciality Chemicals dealing in bulk Drugs & Pharma, (iv) buildings Products, (v) Lubricating Oils, (vi) Property Development and (vii) Others. Others include Floriculture, farm produce and trading in chemicals.


14. SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2008

(i) Primary business SegmentRs. Lakhs

Explosives Consult Spl. Chem Building Products Lubricating Oils Others Property unallocated Eliminations TotalReVeNUe 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

external 18,932.42 14,868.70 14,131.99 6,444.17 4,937.72 3,362.43 299.86 237.48 40,468.32 36,710.99 6.72 9.15 600 1,178.54 4,429.55 1,372.02 - - 83,806.58

64,183.48

Inter-segment 2.86 77.79 35.62 16.45 14.18 (94.24) (52.66) -

Total Revenue 18,932.42 14,868.70 14,131.99 6,444.17 4,937.72 3,362.43 299.86 240.34 40,546.11 36,746.61 23.17 23.33 600 1,178.54 4,429.55 1,372.02 (94.24) (52.66) 83,806.58

64,183.48

ReSULT

Segment result 351.92 (146.32) 1814.66 1402.88 (2067.94) (334.95) (34.16) 81.88 2460.41 1564.82 (9.33) (47.10) 600 1169.64 3,115.56 3,527.09 Unallocated Corporate expenses net of unallocated income 3552.04 644.23

Interest expense (2381.22) (1883.68)

Interest Income 242.03 132.4

Dividend Income 27.66 1.42Profit before Taxation & extraordinary expenditure 4556.07 2421.46extraordinary expenditure 493.77 462.32

Net Profit 4062.30 1959.14

OTheR INFORMATION

Segment Assets 15086.56 14092.50 10223.33 8794.49 10286.98 9290.78 639.59 647.44 21017.09 15342.63 307.17 304.95 184618.22@ 81.70 5897.93 9057.66 248,076.97

57,612.15

Segment Liabilities 6839.70 6091.44 2492.51 2000.77 2817.11 1821.82 147.41 167.02 11500.77 7648.09 57.96 71.56 18307.40 25494.61 42,162.86

43,295.31

Capital expenditure 223.53 299.19 1766.79 4304.57 66.69 574.93 7.54 210.07 196.39 2.74 0.44 259.86 33.41 2,529.68 5,416.47

Depreciation 236.45 229.38 748.58 347.48 370.94 182.40 59.53 61.06 257.14 211.81 0.16 12.98 49.18 28.88 1,721.98 1,073.99 Non-cash expenses other than depreciation - 344.34 - 344.34

@ includes Rs.183896.69 Lakhs arising on revaluation of fixed assets (refer note 17).

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(b) Geographical Segment:

The Geographical segments considered for disclosure are as follows:

- Revenue within India includes sales to customers located within India earnings in India

- Revenue outside India includes sales to customers located outside India earnings outside India

15. Pursuant to the adoption of Accounting Standard 15, employee benefits (AS15), the Group has revised the provision for retirement and other benefits as at 31st March 2007. An additional liability (including unrecognized past service cost) of Rs. 444.69lakhs (net of deferred tax Rs. 228.98 lakhs) arising out of such revision has been adjusted from the opening revenue reserves as at 1st April 2007 in accordance with the transitional provisions of AS15.

16. Income from Property Development:

a) The Parent Company in the previous year entered into “Development Agreements” with IDL Arom International Limited (wholly owned subsidiary upto 31st December 2006) towards sale of development rights in various properties owned by it for a consideration of Rs.300 lakhs (previous year Rs.2331 lakhs) which has been based on valuers report. IDL Arom would undertake construction on the aforesaid properties. Subsequent to the development of such properties, and at the time IDL Arom enters into agreements for sale with intending buyers on such terms and conditions as it may deem fit, the Parent Company shall convey its right, title and interest in the said properties in favour of the intending buyers without further consideration.

b) The Parent Company in the previous year entered into “Option for Development Rights” with Aasia Property Development Limited (APDL) wherein, APDL has only the right to decide whether or not to exercise the option to acquire the development rights in respect of certain properties of the Company located at hyderabad and bangalore. The offer of grant of the development rights in respect of the said properties by the Company is open upto 30th September 2007 and extended to 31st july 2008. In consideration of the company agreeing to keep such offer open APDL has paid an amount of Rs.300 lakhs (previous year Rs.1000 lakhs) as a Non Refundable Commitment Amount for extending the agreement. Further, if the option for development is exercised by APDL, a Development Agreement would be entered with the Company wherein, the Company shall be entitled to share of the Gross Sale Proceeds (as determined in the agreement) realized from the sale of buildings constructed on the said properties.

The consideration received on entering into the above agreements aggregating to Rs.600 lakhs (Previous Year Rs.337 lakhs) has been shown under “Income from Property Development” in the Profit and loss account.

17. Land meant for Property development has been revalued as at 31st March, 2008 on current cost basis by approved valuers. The resultant surplus on such revaluation amounting to Rs. 183896.69 lakhs has been credited to Revaluation reserve.

18. Previous year’s figures have been regrouped / recast wherever necessary.


S. SUbRAMANIAN S. PRAMANIK S. G. hINDUJAPlace : MumbaiDate : May 24, 2008



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GuLF OIL Corporation LimitedRegd. Office: kukatpally, Sanathnagar (Ie) PO, hyderabad 500 018

ATTENDANCE SLIP

Folio No: .............................. DP ID: .................................. L F/ Client ID No. ........................................

Shareholders Names: Mr./ Mrs./Miss. ............................................................................................................................................

(in block letters)

IN CASe OF PROXY

Name of the Proxy: Mr./Mrs./Miss. .................................................................................................................................................

(in block letters)

No. of shares held: ………………………………...............................................

I certify that I am a registered Shareholder/ proxy for the registered Shareholder of the Company.

I hereby record my presence at the 47th Annual General Meeting of the Company held on Thursday, the 25th day of September, 2008.

Signature of the Shareholder/ Proxy

Notes: 1. Please bring this Attendance Slip when coming to the Meeting. 2. Please do not bring with you any person who is not a member of the Company.

GuLF OIL Corporation LimitedRegd. Office: kukatpally, Sanathnagar (Ie) PO, hyderabad 500 018

PROXY

I/ We …………………………………………………………....................................................................………………………………

of ………….....................................…………………in the district of ……………......................................……………………………

being a member(s) of GULF OIL Corporation Limited hereby appoint …………...........................................................………..…

of…………………………in the district of…………………………… or failing him ……………………… of…………………………in the

district of ……………………as my/ our Proxy to vote for me/ us on my/ our behalf at the Forty-seventh Annual General Meeting

of the Company to be held on Thursday, the 25th day of September, 2008 and at any adjournment there of.

As witness my/ our hand(s), this………………..day of ……………..2008.

Folio No. ............................... Signature of the Shareholder(s)

DP ID .......................................... Client ID No. ..........................................

AffixRevenueStamp

Note : Proxies, in order to be effective, should be duly stamped, completed, signed and deposited at the Registered Office of the Company not less than 48 hours before the meeting.

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EVENTS OF THE YEAR

YAMAHA SCOOLYOIC event at Taiwan, Riderssponsored by Lubricants Division

'GULF DIRT TRACK' Nation&l Championshipat Kolhapur

GULF FOSTER A CHILD CAR DRIVE, Mumbai

Panel Discussion on Mining prospects in Indiaby Explosives Division

Pashamylaram Works

QUALITY DAY PROGRAMMESSAFETY WEEK PROGRAMMES

Lubricants Division - Corporate & Silvassa Works

Hyderabad Works

Kasia Iron Ore Project,Mining & Infrastruoture Division

SANSCO SERVICES - Annual Reports Library Services - www.sansco.net

GULF OIL Corporation LimitedRegistered & Corporate OfficeKukatpally, Post Bag No. 1Sanathnagar(IE) P.O.Hyderabad 500018

www.gulfoilcorp.com

Manufacturing FacilitiesHyderabad, Silvassa, Rourkela, Singrauli, Korba, Rajrappa,Ramagundam, Dhanbad, Pashamylaram, Udaipur

Regional OfficesBangalore, Delhi, Hyderabad, Kolkata, Mumbai, Nagpur, Udaipur

gulf oil corporation limited - morningstar, inc

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