Aditya Birla Nuvo

The Directors are pleased to present the 51st Annual Report together
 with the Audited Accounts of the Company for the year ended 31st March,
 2008.
 
 The Company has taken many strategic steps during the year to
 strengthen its financials and to achieve all- round growth across all
 the businesses. The focus during the year was:
 
 > To accelerate growth in existing circles of Idea through widening of
 network and expediting roll out in other circles on receipt of
 spectrum.
 
 > To regain market share in the Financial Services businesses through
 expansion of distribution reach.
 
 > To execute integration of Transworks-Minacs and build global delivery
 capacities towards profitable growth, amidst challenges of US Dollar
 weakening.
 
 > To build sizeable world class presence in Apparel Retailing.
 
 > Expanding capacities in various Value Businesses to capitalise on the
 growth opportunities besides optimum utilisation of the resources.
 
 FINANCIAL PERFORMANCE
 
 As a result of these initiatives, your Company has posted
 growth-oriented results during the year. Your Company’s consolidated
 revenues crossed USD 3 billion mark during the year registering a
 year-on-year growth of 45% to Rs. 12,134 Crores from Rs. 8,366.8
 Crores.
 
 The Companys consolidated net profit at Rs. 150.8 Crores is, however,
 lower by 46% during the year, against Rs. 280.9 Crores attained in the
 preceding year largely on account of gestating impact of growing share
 of new business premium in Life Insurance business. Without Life
 Insurance business, consolidated net profit has grown up by 25% to Rs.
 480.3 Crores from Rs. 384.3 Crores.
 
 The standalone revenues of your Company grew by 15% to Rs. 3,924.2
 Crores vis-à-vis Rs. 3,420.5 Crores in the previous year. The
 standalone net profit rose by 8% to Rs. 243.1 Crores from Rs. 225
 Crores in the previous year.
 
 OPERATIONAL REVIEW
 
 All the businesses are on high growth trajectory and have contributed
 significantly to your Company’s growth.
 
 1.  Telecom
 
 Idea Cellular Limited (IDEA), your Company’s telecom venture, added
 about 10 million subscribers during the year to reach 24 million
 subscribers as on 31st March 2008, registering a 71% rise over last
 year’s subscriber base. The all-India market share has improved to 9.4%
 from 8.6%. The Company more than doubled its net profit to Rs. 1,042.3
 Crores from Rs. 502.2 Crores.
 
 2.  Financial Services
 
 Life Insurance
 
 In the Life Insurance business, new business premium income grew by
 123% to Rs. 1,965 Crores on the back of expanded reach and innovative
 product launches. Consequently, Birla Sun Life Insurance Company
 Limited improved its market share amongst private players to 6.6%
 during the year up from 5.3% in the last year.
 
 Consequent to intensification of distribution channel and growing share
 of new business, net loss increased to Rs. 445.3 Crores from Rs. 139.7
 Crores.
 
 Asset Management
 
 Your Directors are pleased to inform that Birla Sun Life Asset
 Management Company Limited (BSLAMC) has won the “Mutual Fund House of
 the Year” award besides wining 5 awards in other categories organised
 by CNBC TV-18 and Crisil. It also bagged 4 Lipper and 2 ICRA awards for
 superior fund performance.
 
 The business has moved one step up to reach the 5th position with a
 6.9% market share in the domestic Assets Under Management (AUM) up from
 5.8% last year.
 
 3.  BPO
 
 In the BPO business, focus is to build global delivery capacities to
 achieve profitable growth. During the year, the business launched six
 new sites to reach a total of 9,089 seats and 12,908 employees across
 26 global delivery centres. The business, which is under the
 integration phase, has been adversely impacted by the weakening of the
 Dollar and US slowdown.
 
 4.  Garments
 
 The Branded Garments business expanded its customer-reach, by opening
 up of 115 new exclusive brand outlets (EBOs) during the year, to reach
 253 EBOs covering 5.1 Lacs square feet of retail space.  The business
 launched two new sub-brands Peter England Elite and Louis Philippe
 Young to enrich brand value and cater all customer profiles.
 Consequently, revenues grew by 23% to Rs. 825.7 Crores.  However,
 gestating impact of new stores and high lease rental lowered
 profitability of the business.
 
 In the contract exports business at Madura Garment Exports Limited, a
 wholly owned subsidiary of your Company, the profitability was impacted
 due to US Dollar weakening and stabilisation of the newly added
 capacity.
 
 5.  IT Services
 
 PSI Data Systems Limited reported revenues at Rs. 101.1 Crores and net
 profit at Rs. 2.5 Crores during the year. The weakening of US Dollar
 arrested higher growth in revenues and profitability.
 
 6.  Carbon Black
 
 The brownfield capacity expansion of 60,000 MTPA at Gummidipoondi was
 commissioned in July 2007.  The business achieved highest ever revenues
 at Rs. 863.8 Crores and operating profit at Rs. 152.6 Crores on the
 back of expanded capacity. As part of its growth initiative, your
 Company is accelerating the greenfield capacity expansion of 120,000
 MTPA.
 
 7.  Fertilisers
 
 In Fertiliser business, the urea production was impacted due to plant
 shutdown for de-bottlenecking and maintenance and subsequent plant
 breakdown. The loss was partly offset by insurance claim of Rs. 20.3
 Crores, accounted for during the year. The business posted revenues at
 Rs. 765 Crores and operating profit at Rs. 102.4 Crores.
 
 8.  Insulators
 
 As informed last year, Aditya Birla Insulators Ltd. (ABIL) had become a
 subsidiary of your Company in 2006. Through a Scheme of Amalgamation,
 ABIL has been merged with your Company, with effect from 1st April,
 2007.
 
 On a like-to-like basis, revenues from insulators business rose by 65%
 to Rs. 398.7 Crores during the year against Rs. 241.2 Crores achieved
 last year. The Operating Profit of the business, on a like-to-like
 basis, more than doubled to Rs. 136.3 Crores during the year from Rs.
 54.3 Crores last year.
 
 The capacity of Halol Unit was expanded by 3,000 MTPA through
 de-bottlenecking. Your Company plans to expand capacities at the Rishra
 Unit by 12,000 MTPA in two phases besides foraying into polymer
 insulators.
 
 9.  Rayon
 
 The Rayon business showed satisfactory performance amidst a challenging
 business environment.  Revenues were up by 8% to Rs. 475.2 Crores from
 Rs. 441.5 Crores. Operating Profit was up at Rs. 124.4 Crores as
 against Rs. 119.7 Crores in the previous year despite sharp rise in
 input material and fuel prices.
 
 10. Textiles
 
 The growth in the Textiles business was arrested due to steep
 appreciation in Indian Rupee during the year. The business registered
 revenues at Rs. 594.9 Crores, lower by 5% as compared to Rs. 625.0
 Crores achieved in the previous year. Excluding the synthetic yarn
 segment, which was completely exited in October 2007, revenues from
 continued operations grew by 10%, to Rs. 575.8 Crores, on a
 like-to-like basis. The operating profit was, however, maintained at
 Rs. 67.9 Crores.
 
 STANDALONE FINANCIAL PERFORMANCE
 
 Operational Review
 
 VOLUMES
 
 Products                                 Unit
 Production :
 
 Viscose Filament Yarn                    MT
 Carbon Black                             MT
 Insulators                               MT
 Textiles
 Cloth                                  000 Mtrs.
 Spun Yarn                                MT
 Urea                                     MT
 
 Sales :
 
 Garments                               Lac Pcs.
 
 Viscose Filament Yarn                    MT
 
 Carbon Black                             MT
 
 Insulators                               MT
 Textiles
 
 Cloth                                   000 Mtrs.
 Spun Yarn                                MT
 Urea                                     MT
 
 FY 2008                 FY 2007          Variation (%)
 
   17,000                 17,669               4
  215,103                182,668              18
   32,921                   -                  -
    4,792                  5,088               6
   12,282                 17,720              31
  880,991              1,028,065              14
    109.7                  107.1               2
   17,923                 17,039               5
  214,617                180,893              19
   32,304                  7,776             315
    4,710                  4,645               1
   12,370                 18,357              33
  870,305              1,043,565              17
 
 Note: Insulator manufacturing subsidiary merged with Aditya Birla Nuvo,
 w.e.f 1st April, 2007.
 
 STANDALONE REVENUES
 
                                                             Rs. Crores
 
 Products                       FY 2008     FY 2007       Variation (%)
 
 Garments                        825.71      700.12         18
 Carbon Black                    863.84      738.94         17
 Fertilisers                     765.04      778.48          2
 Insulators                      398.69      112.81        253
 Rayon                           475.18      441.46          8
 Financial Services                5.27       27.65         81
 Inter-Unit Elimination           (4.39)      (3.99)         -
 Total                         3,924.21    3,420.47         15
 
 FINANCIAL RESULTS
 
 Rs. Crores
 
                                                On Consolidated Basis
                                               Current        Previous
                                               Year Ended   Year Ended
                                               31.03.2008    31.03.2007
 
 Profit before Depreciation and Tax               676.24        776.25
 Depreciation and Amortisation                    524.94        422.78
 Profits before Tax and Exceptional Items         151.30        353.47
 Exceptional Gain/(Loss)                            0.73          0.52
 Profit before Tax                                152.03        353.99
 Provision for Tax                                125.86         111.9
 Net Profit before Minority Interest               26.17        242.09
 
 Minority Interest in the Loss of Consolidated
 
 Subsidiaries                                    (124.61)      (38.34)
 Share of Profit/(Loss) of Associate                 -           0.46
 Net Profit                                       150.78       280.89
 Balance Brought Forward                         (565.84)     (281.20)
 Adjustment Due to AS-15                             -          (8.26)
 Amount Transferred on change in stake in
 Subsidiaries/Joint Ventures                       18.41      (348.39)
 Profit Available for Appropriation              (396.65)     (356.96)
 
 Appropriation :
 
 Proposed/Interim Dividend                         56.28        51.32
 Corporate Tax on Dividend                          9.58         7.29
 General Reserve                                     175       150.05
 Special Reserve                                    4.97         0.22
 Surplus Carried to Balance Sheet                (642.48)     (565.84)
 Total                                           (396.65)     (356.96)
 
 Exceptional Items
 
 VRS Expenses                                        -           2.01
 Gain/(Loss) on Sale of Long Term
 Strategic Investment (Net)                         0.73         2.53
 Exceptional Gain/(Loss)                            0.73         0.52
 
 On Standalone Basis
 
  Current    Previous 
 Year Ended  Year Ended 
 31.03.2008  31.03.2007
 
 454.93          432.63
 141.10          120.32
 313.83          312.31
   0.73           (1.23)
 314.56          311.08
  71.49           86.11
 243.07          224.97
  
   -                -
   -                - 
 243.07          224.97
  16.90            0.45
   -                -
   -                -
 259.97          225.42
  54.63           51.32
   9.28            7.20
    175             150
   -                -
  21.06           16.90
 259.97          225.42
   -               1.43
   0.73            0.20
   0.73           (1.23)
 
 The operational performance of each of your Company’s business has been
 spelt out in depth in the Management Discussion and Analysis Report,
 which forms part of this Annual Report.
 
 DIVIDEND
 
 Your Directors recommend for your consideration a dividend of Rs.
 5.75/- per Equity Share of Rs. 10/- for the year ended 31st March,
 2008.
 
 The final outgo on dividend is as under                   Rs. Crores
                                           Current Year   Previous Year
 
 On 95,008,050, fully paid-up Equity 
 Shares of Rs. 10/- each,
 @ Rs. 5.75 per Share                          54.63           -
 (Previous year – Interim (Final) Dividend
 On 93,305,187 fully paid-up Equity 
 Shares of Rs. 10/- each
 @ Rs. 5.50/- per Share)                         -           51.32
 
 Corporate Dividend Tax                         9.28          7.19
 
 FINANCE
 
 Your Company raised long-term rupee loans aggregating to Rs. 115 Crores
 and foreign currency loans by way of External Commercial Borrowings
 amounting to JPY 4,648.65 million (Rs.160.3 Crores).
 
 Long term loans totaling Rs. 103.6 Crores were repaid on their due
 date.
 
 PREFERENTIAL ISSUE
 
 To augment funds to meet Company’s Investments/Capital Expenditure for
 its existing as well as new growth opportunities, to enhance long term
 resources and thereby strengthening the financial structure of the
 Company and after receiving the requisite approvals and in accordance
 with the relevant SEBI Guidelines, your Company issued 20,500,000
 Warrants through Preferential Offer to Promoters/Promoter Group at a
 price of Rs. 2,007.45 per warrant, each warrant being convertible over
 a period of 18 months from the date of allotment into one Equity Share
 of Rs. 10/- each at a premium of Rs. 1,997.45 per share. Till 31st
 March, 2008, a sum of Rs. 411.5 Crores had already been received on
 application. Out of the above, the Promoters/Promoter Group have
 exercised their option on 1,700,000 warrants on 31st March, 2008, and
 the equity shares against the same have been allotted on the same day
 against the receipt of Rs. 307.1 Crores, net of application money.
 
 The paid-up Equity Share Capital of the Company stands increased to Rs.
 95.01 Crores as on 31st March, 2008.
 
 HUMAN RESOURCES
 
 At your Company, employees continue to be the key driving force of the
 organization and remain a strong source of our competitive advantage.
 We believe in aligning business priorities with the aspirations of
 employees leading to the development of an empowered and responsive
 human capital. We strive to create a work environment which encourages
 innovation and creativity.
 
 Through our strong Employer Brand, we were able to attract more than
 4900 employees to the company who have become part of our exiting
 competent and committed workforce. Appropriate measures are being
 planed by the company to ensure talent retention and employee
 engagement.
 
 Your Company continued to support learning and development initiatives
 to enhance the functional as well as the behavioural competencies of
 our people. At ‘Gyanodaya’ - The Aditya Birla Institute of Management
 Learning, over 210 executives were enlisted for various high quality
 learning interventions. 
 
 These programs supplemented with a combination of developmental
 assignments, classroom and web based training, has enabled our people
 to continuously learn, develop and grow.
 
 Our performance management system is primarily based on competencies
 and values. We closely monitor growth and development of top talent in
 your Company, to align personal aspirations with the organization
 purpose.
 
 CONSOLDATED FINANCIAL RESULTS
 
 Consolidated Financial Statements, pursuant to Clause 41 of the Listing
 Agreement entered into with the Stock Exchanges and prepared in
 accordance with the Accounting Standards prescribed by the Institute of
 Chartered Accountants of India, are attached for your reference.
 
 CORPORATE GOVERNANCE
 
 Your Directors reaffirm their commitment to good corporate governance
 practices and adhere to all the major stipulations laid down by the
 SEBI Corporate Governance Practices.
 
 This Annual Report contains a section on Corporate Governance
 highlighting adherence to the SEBI Code on Corporate Governance.
 
 Your Company’s Statutory Auditors’ Certificate, dated 30th April, 2008,
 in terms of Clause 49 of the Stock Exchange Listing Agreement, is
 annexed to (Annexure A) and forms part of the Directors’ Report.
 
 As required under Section 217(2AA) of the Companies Act, 1956, your
 Directors confirm that:
 
 i) in the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 ii) the Directors have selected such accounting policies and applied
 them consistently and made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company at the end of the financial year and of the profit of
 the Company for that period;
 
 iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities; and
 
 iv) the Directors have prepared the annual accounts on a ‘going concern
 basis.
 
 SUBSIDIARY COMPANIES
 
 Madura Garments Exports US, Inc. and Madura Garments International
 Brand Company Limited became subsidiaries, and Millman Insurance,
 Canada, has ceased to be a subsidiary of your Company.
 
 Aditya Birla Insulators Limited, (effective from 8th August, 2007),
 also ceased to be a subsidiary of your Company as it merged with your
 Company.
 
 Birla Insurance Advisory Services Limited, a subsidiary of your
 Company, started pursuing insurance broking activity. So its name was
 changed to Birla Insurance Advisory and Broking Services Limited.
 
 The BPO business is being integrated under a common brand, viz.,
 “Aditya Birla Minacs”. Accordingly the names of Transworks Information
 Services Limited and Transworks BPO Philippines Inc. were changed to
 Aditya Birla Minacs Worldwide Limited and Aditya Birla Minacs
 Philippines Inc., respectively.
 
 In line with the approval granted by the Central Government under
 Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet,
 Profit and Loss Account, Report of the Board of Directors and Report of
 the Auditors of the subsidiary companies have not been attached to the
 Balance Sheet of the Company as at 31st March, 2008.
 
 The Annual Accounts of the subsidiary companies and the related
 detailed information will be made available to the investors of the
 Company and of the subsidiary companies, who seek such information at
 any point of time. The Annual Accounts of the subsidiary companies are
 open for inspection by any investor at the Registered Office of the
 Company and of the concerned subsidiary companies. Any shareholder of
 the Company, who wishes to obtain a copy of the said documents of any
 of the subsidiary companies, may send a request in writing to the
 Company Secretary at the Registered Office of the Company so that the
 needful can be done.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 As mentioned last year, to share the value created by the employees and
 to promote the culture of employee ownership in your Company, the
 Company had introduced the “Employee Stock Option Scheme – 2006” (ESOS
 – 2006) for granting, offering and issuing upto 475,000 Equity Shares
 of the Company in one or more tranches.
 
 In terms of ESOS 2006, the ESOS Compensation Committee has on 23rd
 August, 2007, and 25th February, 2008, granted 329,373 Stock Options to
 the Wholetime Directors and employees, including 7,410 Options to some
 employees of the subsidiary companies, in two tranches. Such options
 will vest in 4 equal annual instalments after one year of the grant and
 shall be exercisable within a period of 5 years from the date of the
 vesting.
 
 Details of the options issued under ESOS - 2006, as also the
 disclosures in compliance with Clause 12 of Securities and Exchange
 Board of India (Employees Stock Option Scheme) Guidelines 1999, are set
 out in the Annexure ‘A’ to this Report.
 
 FIXED DEPOSITS
 
 Your Company accepts and renews fixed deposits from the employees
 (including ex-employees) of the Company or other companies whose
 accounts are being consolidated with the Company. As on 31st March,
 2008, there were no unclaimed deposits. The total deposits accepted are
 Rs.3.46 crores as at 31st March, 2008.
 
 The erstwhile Birla Global Finance Ltd. (since amalgamated with the
 Company) had accepted deposits from the public till 24th July, 2000. Of
 the total matured fixed deposits, as on 31st March, 2008, there were
 unclaimed fixed deposits of Rs. 7.36 Lacs. These unclaimed deposits are
 kept in a separate earmarked bank account.
 
 PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
 
 The Information relating to the Conservation of Energy, Technology
 Absorption and Foreign Exchange Earnings and Outgo required under
 Section 217(1)(e) of the Companies Act, 1956, is set out in a separate
 statement attached to this Report (Annexure ‘B’) and forms part of it.
 
 In accordance with the provisions of Section 217(2A), read with the
 Companies (Particulars of Employees) Rules, 1975, the names and other
 particulars of employees are to be set out in the Directors’ Report, as
 an addendum thereto. However, as per the provisions of Section
 219(1)(b)(iv) of the Companies Act, 1956, the Report and accounts, as
 therein set out, are being sent to all members of the Company excluding
 the aforesaid information about the employees. Any member, who is
 interested in obtaining such particulars about employees, may write to
 the Company Secretary at the Registered Office of the Company.
 
 DIRECTORS
 
 During the year under review, Mr. S. K. Mitra, Wholetime Director,
 resigned w.e.f. 1st August, 2007. The Board places on record its
 sincere appreciation of the valuable services rendered by him during
 his tenure as a Director of the Company.
 
 Mrs. Rajashree Birla, Mr. P. Murari and Mr. G. P. Gupta, retire from
 office by rotation, and being eligible, offer themselves for
 re-appointment at the ensuing Annual General Meeting.
 
 AWARDS AND RECOGNITION
 
 Your Company has been the proud recipient of the following awards and
 recognitions :
 
 - INDIAN RAYON DIVISION
 
 - Top Rank Certificate for Energy Conservation in the Textile Sector
 from Union Ministry of Power, New Delhi.
 
 - Silver Award in Textile Sector for outstanding achievement in
 Environment Management from Greentech Foundation, Goa.
 
 - Trophy for SAP implementation in Chemical business awarded by SAP ACE
 2007.
 
 - CIO 100 2007 Award for IT invocation awarded by The Innovative 100
 for demonstrating innovative application of IT, New Delhi.
 
 - ICC Award for Excellence in Energy Conservation and Management from
 Indian Chemical Council.
 
 - JAYASHREE TEXTILES DIVISION
 
 - Recognition for Energy Conservation initiatives from Ministry of
 Power, New Delhi.
 
 - MADURA GARMENTS DIVISION
 
 - The AVAYA GLOBAL CONNECT CUSTOMER RESPONSIVENESS AWARD 2007” for the
 best service in Indian Industry’s manufacturers sector by Economic
 Times.
 
 - Clothing Manufacturers Association of India Awards:
 
 - Louis Philippe” was adjudged the Best Men’s Wear Brand under Formals
 category.
 
 - Allen Solly” was adjudged the Best Women’s Wear Brand under Western
 wear category.
 
 - Madura Garments - Most admired company of the year.
 
 - Madura Garments - Clothing Company of the year under Domestic
 category.
 
 - Madura Garments - Supply Chain Management Company of the year.
 
 - Images Fashion Awards:
 
 -   Louis Philippe” was adjudged the Best Formal Wear Brand.
 -   Allen Solly” was adjudged the Best Women’s Wear Brand.
 -   Van Heusen” was adjudged the Best Shirts Brand for men.
 -   Madura Garments - Most admired Fashion Company of the year.
 
 - INDO GULF FERTILISERS
 
 - Certificate of Appreciation from “TERI” for efforts towards
 environmental management and innovative initiatives.
 
 - INSULATORS DIVISION
 
 - The Golden Peacock National Quality Award-2007 in manufacturing
 category.
 
 AUDITORS
 
 The observations made in the Auditors’ Report are self-explanatory and,
 therefore, do not call for any further comments under Section 217(3) of
 the Companies Act, 1956.
 
 Your Directors request you to appoint Auditors for the current year as
 set out in the accompanying Notice of the Annual General Meeting.
 
 APPRECIATION
 
 Your Directors take this opportunity to express their sincere
 appreciation for the excellent support and co-operation extended by the
 shareholders, customers, suppliers, bankers and other business
 associates. Your Directors gratefully acknowledge the ongoing
 co-operation and support provided by Central and State Governments and
 all Regulatory bodies.
 
 Your Directors place on record their deep appreciation for the
 exemplary contribution made by the employees at all levels. Their
 dedicated efforts and enthusiasm have been pivotal to your Company’s
 growth.
 
                               For and on behalf of the Board
 
 Mumbai                        Chairman
 30th April, 2008