Ballarpur Industries

The Directors have pleasure in presenting the Sixty Third Annual
 Report together with the Audited Statement of Accounts for the
 financial year ended 30 June 2008.
 
 FINANCIAL HIGHLIGHTS
 
                                                       consolidated
 particulars                                       2007-08     2006-07
 
 Sales                                             3025.95     2524.21
 Profit before Interest and Depreciation.           714.67      585.51
 Less; Interest and Finance Charges (Net)           148.24      100.34
 Profit before Depreciation                         566.43      485.17
 Less: Depreciation                                 192.38      156.54
 Net Profit for the year before Tax                 374.05      328.63
 Less: Provision for Taxation                        70.43       73.53
 Net Profit after tax                               303.62      255.10
 Less: Minority Interest                              6.48        0.45
 Add: Share of Profit in Associate Companies          2.77        1.32
 Add : Balance brought forward from
 the previous year                                  176.94      111.93
 Add :.Debenture Redemption Eeserve no
 longer required                                      2.72        1.36
 Leaving a surplus of                               479.58      369.25
 Which your directors recommend, be
 appropriated as follows;_
 Transfer to General Reserve                         30.00      130.00
 Payment of Dividend
 Dividend relating to year 2005-06
 On 35,44,141 Equity Shares
 @15 percent (including Dividend
 Tax of Rs. 0.07 crore)                                  -        0.61
 Interim Dividend paid on 17,02,51,514
 Equity Shares @ 15 percent 
 for the year 2006-07 (including
 Dividend Tax of Rs. 3.58 crore)                         -       29.12
 Proposed Final Dividend on 55,55,23,839
 Equity Shares of Rs. 2/-.
 each @ 35 per cent (Previous year 2006-07
 on 18,57,07,430 Equity .
 Shares of Rs. 10/- each @ 15 percent                38.89       27.86
 Add: Dividend Tax                                    6.61        4.73
 Balance carried forward to next
 years Account.                                    404.09      176.94
 
               IN RS. CRORE
           standalone
   2007-08         2006 -07
 
   1030.89          2368.76
    228.46           565.50
     27.81            86.98
    200.65           478.53
     63.38           154.91
    137.27           323.62
      7.82            72.85
    129.45           250.77
         -                -
         -                -
    170.46           110.65
      2.72             1.36
    302.63           362.78
     30.00           130.00
         -             0.61
         -            29.12
     38.89            27.86
      6.61             4.73
    227.14           170.46
 
 Three undertakings of your Company situated at Bhigwan, Ballarpur and
 Kamalapuram were transfered to BILI Graphic Paper products Limited
 w.e.f. 1 July 2007
 
 CREATION OF THE AVANTHA GROUP
 
 During the year, your Company joined together with other companies led
 by Mr. Gautam Thapar, to create a new Brand Identity - the Avantha
 Group. The US$ 3 billion Avantha Group has business interests in
 diverse areas including pulp and paper, horticulture and food
 processing, farm forestry, chemicals, power generation, infrastructure,
 power transmission and distribution equipment and information
 technology. Steered by Mr. Gautam Thapar and supported by strong
 professional management teams worldwide, Avantha demonstrates strong
 leadership globally and has emerged as a focused Organisation, I
 
 leveraging its knowledge, leadership and operations, for the Groups
 continuous endeavours to increase value for all its stakeholders.
 
 This initiative aims at identifying commonalities and articulating the
 elements that provide synergy across Group companies. This event is a
 significant milestone for the companies led by Mr. Gautam Thapar,
 collaborating for higher ambitions, by leveraging mutual strengths.
 
 The name Avantha represents the strong foundation that the Group gives
 the individual companies for advancement, growth and diversification.
 The Group Brand will bean umbrella brand-over and above the Companys
 brand. Your Company will therefore retain its name and logo. The Group
 identity will positively impact the Companys positioning in the eyes
 of our stakeholders and also influence, as well as, articulate the
 overarching Culture and Values that will be the bonding force amongst
 the several Group companies.
 
 OPERATIONS
 
 While the year under review posted several challenges primarily on the
 cost front, BILTs ability to overcome these and generate healthy
 profits has been very encouraging.  Your Company continued to improve
 its performance across most parameters like productivity, cost
 efficiency, product mix and quality. This has resulted in improved
 results for the year 2007-08.
 
 A detailed review of the consolidated performance of your Company is
 contained in the Management Discussion and Analysis Report, which is
 given as a separate chapter in the Annual Report.
 
 SCHEME OF ARRANGEMENT AND REORGANISATION
 
 During the year, your Company had implemented a Scheme of Arrangement
 and Reorganisation (the Scheme), sanctioned by the Honble High Court
 of Judicature at Bombay, Nagpur Bench vide its order dated 30 November
 2007, effective from 1 July 2007, whereby three undertakings of your
 Company comprising assets and liabilities at Bhigwan, Ballarpurand
 Kamalapuram were transferred to and vested in its then wholly owned
 subsidiary, BILT Graphic Paper Products Limited (BGPPL), by way of a
 slump exchange.
 
 The consideration for the exchange of  Rs. 1,950 crore was satisfied
 by BGPPL to your Company by allotment of Equity Shares of Rs. 450 crore
 and Debentures of Rs. 1,500 crore. Your Company further transferred the
 same to Ballarpur Paper Holdings B.V.  (BPH), its step down
 subsidiary in the Netherlands. BPH had, based on an equity valuation of
 US$ 825 million, received an investment of US$ 175 million from two
 major Private Equity Investors, JPMorgan Mauritius Holdings VII Ltd.
 (US$ 65 million) and Lathe Investments Pvt Ltd., a wholly owned
 subsidiary of Government of Singapore Investment Corporation (US$ 110
 million), which resulted in dilution of shareholding of Ballarpur
 International Holdings B.V. by 21.2 percent. BPH had also received
 international debt financing of US$ 560 million from international
 banks and institutions / international branches of national banks. BPH
 had remitted Rs.1,950 crore to your Company as consideration.
 
 Pursuant to the aforesaid Scheme, the equity share capital of your
 Company was reorganised by share split i.e. 1 Equity Share of face
 value of Rs. 10/-each was sub-divided into 5 Equity Shares of face
 value of Rs.2/- each on the record date i.e.  10 March 2008 and a
 simultaneous compulsory buyback of 40 per cent of the paid up equity
 share capital at a price of Rs.  25/- per share. In addition, your
 Company bought back 15,98,451 Equity Shares of Rs. 2/- each from small
 shareholders, in terms of the aforesaid Scheme, at a price of Rs. 30/-
 per share. The present share capital of your Company is Rs.111.10 crore
 divided into 55,55,23,839 Equity Shares of Rs.2/-each.
 
 Your Company had utilised part of the funds received from BPH for the
 purpose of buyback of Equity Shares, discharge of significant debt and
 remaining for various corporate purposes.
 
 Your Company continues to hold substantial stake as a holding company
 in BPH, Sabah Forest Industries Sdn. Bhd. and BGPPL. The accounts of
 these Companies shall continue to be consolidated with the accounts of
 your Company.
 
 DIVIDEND
 
 Your Directors have, keeping in view the profitability of the Company,
 recommended payment of enhanced dividend of Rs. 0.70 per Equity Share
 of Rs. 2/- each (previous year Rs. 3.00 per Equity Share of Rs. 10.00)
 on the Equity Share capital of your Company for the financial year
 ended 30 June 2008.
 
 DIRECTORATE
 
 Mr. Gautam Thapar and Mr. R. K. Ahooja, Directors retire by rotation at
 the forthcoming Annual General Meeting, and being eligible, offer
 themselves for re-appointment.
 
 Dr. Pramath Raj Sinha and Mr. Ashish Guha were appointed as Additional
 Directors with effect from 30 April 2008 and 29 July 2008,
 respectively. They hold office upto the date of the forthcoming Annual
 General Meeting and considering that the Company will benefit from
 their continuance as Directors, their appointments are being
 recommended.
 
 ICICI Bank Limited had withdrawn Ms. Zarin Daruwala as its
 Representative Director w.e.f. 8 August 2008. The Board places on
 record its appreciation for the guidance, support and valuable
 contributions of Ms. Daruwala during her association with the Company.
 
 The details of the Directors being recommended for appointment as well
 as re- appointment are contained in the Corporate Governance Report.
 
 PROMOTER GROUP
 
 The Avantha Group includes some companies of the BM Thapar Group, since
 vested with Mr. Gautam Thapar and the erstwhile LM Thapar Group
 companies bequeathed to Mr. Gautam Thapar. The BM Thapar Group and LM
 Thapar Group were recognised by the Securities and Exchange Board of
 India by its Order dated 8 October 2001 (as modified from time to
 time).
 
 Therefore, Ballarpur Industries Limited, along with the following
 entities, constitutes a Group as defined under the Monopolies and
 Restrictive Trade Practices Act, 1969 :
 
 BILT Graphic Paper Products Limited, Ballarpur International Holdings
 B.V., Ballarpur Paper Holdings B.V, Ballarpur Graphic Paper Holdings
 B.V.,
 
 Ballarpur International Paper Holdings B.V., Ballarpur International
 Graphic Paper Holdings B.V., Sabah Forest Industries Sdn.  Bhd., BILT
 Tree Tech Limited, JG Containers (Malaysia) Sdn. Bhd., Mirabelle
 Holdings LLC, NewQuest Corporation Limited, BILT Paper Holdings
 Limited, KCT Papers Limited, KCT Chemicals & Electricals Limited, APR
 Sacks Limited, The Paperbase Company Limited, Janpath Investments and
 Holdings Limited, BILT Industrial Packaging Company Limited, Biltech
 Building Elements Limited, UHL Power Limited, Asia Aviation Limited,
 Toscana Lasts Limited, Toscana Footwear Components Limited, NQC Global
 (Mauritius) Limited, NQC International (Mauritius) Limited, NewQuest
 Services Private Limited, Avantha Technologies Limited, NewQuest
 Insurance Broking Services Limited, Avantha Power & Infrastructure
 Limited, Korba West Power Company Ltd., TKS Developers Ltd., Jhabua
 Power Ltd., Gleneagles Healthcare Holdings Private Ltd., Global Green
 Company Limited, Global Green USA Limited, GG International N.V.,
 Intergarden N.V., Intergarden (India) Private Limited, Dunakiliti
 Kanzervuzem Kft, Greenhouse Agraar Kft, Floragarden Tarim Gida Sanay ve
 Ticaret A.S., Solaris Holdings Limited, Solaris Chemtech Limited,
 Solaris Chemtech Industries Limited, Solaris Industrial Chemicals
 Limited, Salient Business Solutions Limited, Salient Knowledge
 Solutions Limited, Salient Financial Solutions Limited, Salient
 Business Solutions USA, Inc., Sairam Infra Projects Private Limited,
 Crompton Greaves Limited, CG Energy Management Private Limited, CG
 Capital & Investments Limited, CG-PPI Adhesive Products Limited,
 Malanpur Captive Power Limited, Brook Crompton Greaves Limited, CG
 Actaris Electricity Management Limited, CG Lucy Switchgear Limited,
 International Components India Limited, CG International B.V., Pauwels
 International N.V., Pauwels Americas Inc., PT Pauwels Trafo Asia,
 Pauwels Trafo Gent N.V., Pauwels Canada Inc., Pauwels Transformers
 Inc., Pauwels Trafo Ireland Limited, Pauwels France SA. Pauwels Trafo
 Belgium N.V., Pauwels Trafo Service N.V., Pauwels Middle East Trading
 and Contracting Limited, Crompton Greaves Hungary Kft, Transverticum
 Kft, GanzTranselektro Villamossagi Zrt., Microsol Holdings Limited,
 Microsol Limited, Viserge Limited, Microsol UK Limited, Tricon Controls
 Limited and Microsol Inc.
 
 SUBSIDIARY COMPANIES
 
 Your Company has two Indian subsidiaries viz. BILT Tree Tech Limited
 (BTTL) and BILT Graphic Paper Products Limited (BGPPL) and six
 foreign subsidiaries i.e. five based in The Netherlands namely,
 Ballarpur International Holdings B.V. (BIH), Ballarpur International
 Graphic Paper Holdings B.V. (BIGPH), Ballarpur Paper Holdings B.V.
 (BPH), Ballarpur Graphic Paper Holdings B.V. (BGPH) and Ballarpur
 International Paper Holdings B.V. (BIPH) and one based in Malaysia
 i.e. Sabah Forest Industries Sdn. Bhd. (SFI).
 
 BTTL is a direct subsidiary and BGPPL is a step down subsidiary of your
 Company.
 
 As on date, BIH is a wholly owned subsidiary of your Company and
 holding company of BIGPH with an equity stake of 78.8 per cent and the
 balance 21.2 per cent is held by two Private Equity Investors,
 consequent to transfer of shares of BIGPH and BPH. BPH is a wholly
 owned subsidiary of BIGPH. BPH owns 97.8 per cent of the paid up
 capital in SFI and 100 per cent of the paid up capital in BGPH. BIPH
 isa wholly owned subsidiary of BGPH and holds approx.  100 per cent of
 paid up equity share capital in BGPPL.
 
 Your Company has obtained an exemption under Section 212 of the
 Companies Act, 1956, from annexing to this Report, the Annual Reports
 of the abovementioned 2 Indian subsidiaries and 6 foreign subsidiaries,
 for the year ended 30 June, 2008. However, if any Member of the Company
 or its subsidiaries so desires, the Company will make available, the
 Annual Accounts of the subsidiaries to them, on request. The same will
 also be available for inspection at the Registered and Head Office of
 your Company and of its subsidiaries, during working hours upto the
 date of the Annual General Meeting.
 
 The details of each subsidiary with respect to capital, reserves, total
 assets, total liabilities, details of investment (except in case of
 investment in subsidiaries), turnover, profit before taxation,
 provision for taxation, profit after taxation and proposed dividend are
 detailed in the Annual Report.
 
 CONSOLIDATION OF ACCOUNTS
 
 As required by Accounting Standards AS-21 and AS-23 of the Institute of
 Chartered Accountants of India, the financial statements of your
 Company reflecting the consolidation of the Accounts of your Company
 and its 8 subsidiaries mentioned above are annexed to this Report.
 
 CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION
 AND FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 As required by the Companies (Disclosure of Particulars in the Report
 of Board of Directors) Rules, 1988, the relevant particulars pertaining
 to conservation of energy, research & development, technology
 absorption and foreign exchange earnings and outgo are given in the
 prescribed format as an Annexure to this Report.
 
 PARTICULARS OF EMPLOYEES
 
 The statement of particulars, required pursuant to Section 217C2A) of
 the Companies Act, 1956 read with the Companies (Particulars of
 Employees) (Amendment) Rules, 2002, forms a part of this Report.
 However, as permitted by the Companies Act, 1956, the Report and
 Accounts are being sent to all Members and other entitled persons
 excluding the above statement. Those interested in obtaining a copy of
 the said statement may write to the Company at its Registered Office
 and the same will be sent by post. The statement is also available for
 inspection at the Registered Office, during working hours upto the date
 of the Annual General Meeting.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors would like to assure the Members that the financial
 statements for the year under review conform in their entirety to the
 requirements of the Companies Act, 1956.
 
 The Directors confirm that:
 
 The Annual Accounts have been prepared in conformity with the
 applicable Accounting Standards;
 
 The Accounting Policies selected and applied on a consistent basis,
 give a true and fair view of the affairs of your Company and of the
 profit for the financial year;
 
 Sufficient care has been taken that adequate accounting records have
 been maintained for safeguarding the assets of the Company; and for
 prevention and detection of fraud and other irregularities;
 
 The Annual Accounts have been prepared on a going concern basis.
 
 AUDITORS
 
 The Statutory Auditors of the Company, M/s. K. K. Mankeshwar&Co.,
 retire at the ensuing Annual General Meeting and being eligible, offer
 themselves for re-appointment.  The Company has received a letter from
 the Statutory Auditors to the effect that their re- appointment, if
 made at the ensuing Annual General Meeting, would be within the limits
 prescribed under Section 224 (IB) of the Companies Act, 1956.
 
 COST AUDIT
 
 As per the provisions of Section 233B of the Companies Act, 1956, an
 audit of Cost Accounts in respect of Paper manufactured by the Company
 at its three units shall be carried out by the Cost Auditors of the
 Company and the Reports on the same will be submitted to the
 appropriate authorities, as required under the relevant rules.
 
 CORPORATE GOVERNANCE
 
 The Auditors, M/s. K. K. Mankeshwar&Co., have certified your Companys
 compliance of the requirements of Corporate Governance in terms of
 Clause 49 of the Listing Agreement with the Stock Exchanges. The Report
 on Corporate Governance together with the said certificate is attached
 and forms part of this Report.
 
 FIXED DEPOSITS
 
 Your Company had, effective August 2004, discontinued acceptance of
 fresh deposits/ renewal. There is no deposit due for maturity.
 Deposits of Rs. 2.62 crore due for repayment as of 30 June, 2008 were
 unclaimed by 1018 depositors. As at the date of this Report, Rs.  0.08
 crore has been claimed and repaid from this total unclaimed amount.
 
 ACKNOWLEDGEMENT
 
 Your Directors place on record their sincere appreciation for the
 contribution made by the employees through their dedication, hard work
 and commitment which is a significant contribution for achieving the
 Companys performance.
 
 We also acknowledge the support and co-operation extended by the
 Financial Institutions, Analysts, Banks, Government Authorities,
 Customers, Vendors, Shareholders and Investors at large and look
 forward towards their continued support.
 
                          For and on behalf of the Board of Directors
 
                                                        GAUTAM THAPAR
                                                             Chairman
 
                                                        R. R. VEDERAH
                                                    Managing Director
 
                                                         B. HARIHARAN
                                              Group Director (Finance)
 
 Date  : 28 August 2008
 Place : Gurgaon