Castrol India

The Directors have pleasure in presenting their Report and Statement of
 Accounts for the year ended 31st December, 2007.
 
                          For the year ended         For the year ended
                         31st December, 2007        31st December, 2006
                           (Rupees in Crores)        (Rupees in Crores)
 
 FINANCIAL RESULTS
 
 Gross Profit before 
 Depreciation, Exceptional 
 Items & Tax                          360.62                 250.25
 Deducting therefrom:
 Depreciation                          20.78                  18.01
 Provision for Tax
 Current [Including Wealth Tax of 
 Rs. 0.16 Crores
 (2006: Rs. 0.16 Crores)]             139.94                  85.24
 Deferred Taxation                    (23.56)                 (5.72)
 Fringe Benefit Tax                     5.56                   3.62
 Excess Income Tax provision for 
 earlier years written back            (0.53)                 (5.39)
 Profit after Tax                     218.43                 154.49
 Adding thereto :
 Balance as per last Balance Sheet 
 brought forward                       40.29                  30.69
 Profit Available for Appropriation   258.72                 185 18
 The appropriations are :
 Dividend
 Interim                               55.64                  49.46
 Final                                117.46                  61.82
 Tax on Dividend Interim                9.46                   6.94
 Final                                 19.96                   8.67
 Final-2006                             1.84                     -
 Transfer to General Reserve           22.00                  18.00
 Balance carried forward               32.36                  40.29
                                      258.72                 185.18
 
 PERFORMANCE
 
 Sales increased by 9% over previous year, to Rs. 2216 crores mainly due
 to increase in unit sales realisations and better sales mix.
 
 Cost of materials reduced by 5.6% over previous year to Rs. 1098 crores
 due to lower volumes, savings in raw material cost on account of
 effective procurement strategy and favourable forex.
 
 Operating and other expenses increased due to increase in advertisement
 and sales promotion expenses, employee related costs and partly offset
 by reduction in freight and processing charges.
 
 Profit Before Tax increased by 46% over previous year to Rs. 340
 crores.
 
 Tax rate for the current year has remained at the same level as that of
 the previous year. Tax expense for the previous year was lower as the
 Company had written back excess provision for taxation of the earlier
 years (net) amounting to Rs.5.4 crores.
 
 As a result Profit After Tax increased by 41% over previous year, to
 Rs. 218 crores.
 
 CORPORATE GOVERNANCE
 
 Pursuant to Clause 49 of the Listing Agreement, a Management Discussion
 and Analysis Report and a Report on Corporate Governance are given as
 Annexures A and B respectively to this Report.
 
 A certificate from the Statutory auditors of the Company regarding the
 Compliance by the Company of the conditions stipulated under clause 49
 of the Listing Agreement is also attached to this Report.
 
 The declaration by the Managing Director pursuant to clause 49(1) (D)
 of the Listing Agreement stating that all the Board Members and Senior
 Management Personnel have affirmed their compliance with the Companys
 Code of Conduct for the year ended 31st December, 2007 is also attached
 to this Report and marked Annexure C.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 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 and no material departures have
 been made from the same.
 
 (ii) The Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as on 31st December, 2007 and of the profits of the
 Company for the year ended 31st December, 2007.
 
 (iii) The Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 (iv) The Directors have prepared the annual accounts on a going concern
 basis.
 
 DIVIDEND
 
 The Interim Dividend in respect of the year ended 31st December, 2007
 of Rs. 4.50 per share on 12,36,40,298 Equity Shares was paid to the
 Shareholders of the Company whose names appeared on the Register of
 Members on 8th August, 2007.
 
 The Directors have recommend a payment of final dividend of Rs. 9.50
 per share on 12,36,40,298 Equity Shares.
 
 FIXED DEPOSITS
 
 There were no fixed deposits outstanding and unclaimed as on 31st
 December, 2007.
 
 DIRECTORS
 
 Mr. S. M. Datta and Mr. A. S. Ramchander retire by rotation and are
 eligible for re-appointment.
 
 The information on the particulars of Directors seeking
 appointment/re-appointment as required under Clause 49 of the Listing
 Agreement executed with the Bombay Stock Exchange Limited and the
 National Stock Exchange of India Limited has been given under Corporate
 Governance (Annexure B) of this Report.
 
 LISTING OF EQUITY SHARES OF THE COMPANY ON THE NATIONAL STOCK EXCHANGE
 OF INDIA LIMITED.
 
 The Companys equity shares are also being traded with effect from 16th
 August, 2007 on the National Stock Exchange of India Limited.
 
 CONSERVATION OF ENERGY
 
 (a) Energy conservation measures taken:
 
 Energy conservation during the financial year has accrued as a result
 of the following steps taken at the various factories of the Company:
 
 Patalganga:
 
 1.  Solar Lights (10 nos.) installed across the plant for illumination.
 
 2.  Reduction of Batch Cycle Time (BCT) for Viscosity Index Improver
 products, for engine oil (Product name: Active 4T) by 4 Hours & Hitec
 5777 product by 18 Hours.
 
 3.  Elimination of screw capping machine from 1 L filling line.
 
 4.  Elimination of 2 nos, of 60 hp motor connected with cutter unit of
 Viscosity Improver blenders by process improvement.
 
 5.  Reduction of Maximum Demand (MD) by eliminating 2 nos. of High
 speed 60 HP motor from Viscosity Improver blender by process
 improvement.
 
 6.  Reduction of Changeover time in 5 Liter filling lines by process
 improvement.
 
 7.  Replacement of 25 nos. Conventional tube-lights by energy efficient
 tube-lights.
 
 8.  Reduced the connected load by 7.5 HP for additive pump by
 conducting motor load survey, replacing old inefficient pumps by new
 pumps with right capacity motors.
 
 9.  Replacing Motorized conveyor (Motor capacity - 1 HP) with idle
 roller conveyor.
 
 Silvassa:
 
 1.  Replacement of Energy Intensive vacuum Palletizer. Line-4 filling
 line had a vacuum palletizer for barrels. This vacuum palletizer main
 prime mover was air pressure. This was replaced with a mechanical
 palletizer which does not require air or electricity. This reduced the
 load of air compressor leading to savings
 
 in air compressor.
 
 2.  Reduction of running hours of borewell pump: The site water
 consumption was to the tune of 12000 kl per month.This directly
 correlated to the running hours of borewell. A water conservation
 program was chalked out and implemented which reduced the water
 consumption by more than 50%. This has reduced the borewell pump
 running hours generating substantial savings in energy consumed.
 
 3.  Installation of high level trips: The raw water tank did not have
 an overflow trip mechanism. Due to this borewell used to run
 continuously. A high level trip mechanism was installed in raw water
 tank which now trips the borewell pump. Total running hours of borewell
 pump has now reduced leading to energy savings.
 
 4. Installation of energy efficient Air Conditioners in control room:
 The air conditioners installed in control room were not energy
 efficient. This was replaced by a Carrier make which has reduced the
 running hours of this equipment.  This has helped in savings of energy
 units of the site.
 
 Tondiarpet:
 
 1.  Replaced thirty numbers conventional Tubelights by Energy Efficient
 Tubelights.
 
 2.  Replacement of 4 numbers inefficient pumps by Energy Efficient
 Pumps.
 
 3.  Replaced 3 Numbers old split air conditioners by energy efficient
 air conditioners.
 
 4.  Installation of energy efficient screw type air compressor with
 inbuilt VFD.
 
 5.  Insulation Jackets fitted to steam line flanges.
 
 Paharpur:
 
 1.  Through monitoring of Electrical installation for proper use and to
 conserve electrical energy i.e. power bill.
 
 2.  Use of solar lighting / solar heating system at plant in place of
 electrical energy.
 
 3.  Providing additional capacitor unit for pf enhancement.
 
 4.  Monitoring the utilization of Thermopack for reduction in
 consumption of LDO for burner.
 
 (b) Additional investments and proposals, if any, being implemented for
 reduction of consumption of energy:
 
 None in particular.
 
 (c) Impact of measures at (a) and (b) above for reduction of energy
 consumption and consequent impact on the cost of production of goods:
 
 The measures mentioned in (a) above have led to reduction in fuel and
 electricity consumption as well as improvement in the productivity.
 
 TECHNOLOGY ABSORPTION
 
 1.  There was continued focus on Health, Safety, Security and
 Environment during the year at Technology Centre. Measures were taken
 to upgrade the site security and various other actions were implemented
 to improve compliance to BPs integrity management standards.
 
 2.  Recognition of R&D Centre was renewed by the Department of
 Scientific and Industrial Research, Government of India.
 
 3.  An integrated business continuity plan forTechnology Centre
 embedding the pandemic response plan was developed and implemented.  
 
 4.  A program was taken up to replace Asbestos roofing with environment
 friendly materials.
 
 5.  Your Company has embarked on a journey of upgrading the site safety
 measures, laboratory facilities and infrastructure. There will be
 continued emphasis in this direction in 2008.
 
 6.  Steps were initiated to enhance technology protection by
 introducing global codes for raw materials right from procurement
 stage.
 
 7.  Your Company had a number of product upgrades and launches in the
 fast growing automotive segment through the introduction of CRB Turbo
 meeting API CH4 specifications, Magnatec with intelligent molecules as
 well as specially formulated lubricants for major OEMs.
 
 8.  A number of Technologies for products from different market spaces
 were validated under Indian conditions for specific propositions like
 fuel economy, extended drain and sludge control to support global as
 well as local market requirements.
 
 9.  Formulation optimization initiatives by Technology team with
 support from supply chain received great amount of focus and attention.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 1.  Activities relating to Export
 
 There were no significant exports by the Company during the year.
 
 2.  Earnings and Outgo
 
 Members are requested to refer to note Nos. 17 & 18 of Schedule M
 forming part of the Balance Sheet and Profit and Loss Account for the
 year ended 31st December, 2007.
 
 PARTICULARS OF EMPLOYEES
 
 The information required to be published under the provisions of
 Section 217(2A) of the Companies Act, 1956 read with Companies
 (Particulars of Employees) Rules, 1975 as amended is enclosed in this
 Report.
 
 AUDITORS
 
 The Shareholders of the Company are requested to appoint Auditors and
 to fix their remuneration.  M/s. S.R. Batliboi & Co., Chartered
 Accountants, the retiring Auditors have furnished to the Company the
 required certificate under section 224(1 B) of the Companies Act, 1956
 and are therefore eligible for re-appointment as Auditors of the
 Company.
 
 PERSONNEL
 
 The Board wishes to place on record its sincere appreciation of the
 efforts put in by the Companys workers, staff and executives for
 achieving excellent results under difficult conditions.
 
 STAKEHOLDERS
 
 The Board also wishes to thank its Shareholders, Distributors, Bankers
 and other business associates for their support during the year.
 
                                    On behalf of the Board of Directors
 
                             N. K. Kshatriya           A. S. Ramchander
                             Managing Director     Director - Automotive
 
                                  A. Ahmad        A. P. Mehta
                               Director - Supply Chain Finance Director
 
 Mumbai
 Dated: 24th March, 2008