Chambal Fertilisers and Chemicals

The Directors have pleasure in presenting the 23rd Annual Report
 together with audited accounts for the financial year ended March
 31,2008.
 
 1.  Financial Results and Appropriations
 
                                                       (Rs, in crore)
 Particulars                             2007-08          2006-07
 
 (a) Turnover (excluding excise duty)    2720.13          2591.31
 
 (b) Gross Profit after Interest 
 but before Exceptional Items,
 Depreciation and Tax                     428.85           385.56
 
 (c) Depreciation                         184.94           176.60
 
 (d) Profit before Exceptional 
 Items and Tax                            243.91           208.96
 
 (e) Exceptional items                     24.17             8.67
 
 (f) Profit before Tax                    268.08           217.63
 
 (g) Provision for Current Tazx            94.40            92.71
 
 (h) Provision for Deferred Tax           (31.89)          (27.83)
 
 (i) Fringe Benefit Tax                     1.26             1.23
 
 (j) Provision for Tonnage Tax              0.51             0.39
 
 (k) Profit after Tax                     203.80           151.13
 
 (I) Balance of Profit Brought Forward    401.92           399.67
 
 (m) Transitional Provision of
 Accounting Standard -15 (Revised)           -              (2.53)
 (Net of deferred tax)
 
 (n) Transferred from Debenture
 Redemption Reserve                        39.82            10.29
 
 (o) Profit available for Appropriation   645.54           558.56
 
 (p) Appropriations:
 
 Debenture Redemption Reserve                -              34.99
 
 Tonnage Tax Reserve                       16.00             9.00
 
 - General Reserve                         25.00            25.00
 
 - Proposed Dividend on Equity Shares      74.92            74.92
 
 - Tax on Dividend                         12.73            12.73 
 
 (q) Balance Carried Forward to
 Balance Sheet                            516.89           401.92
 
 2.  Dividend
 
 The Board recommends dividend @18% on equity shares of Rs. 10 each
 (Previous Year - 18%). The total outgo on this account will be Rs.
 87.65 crore including dividend tax.
 
 3.  De-bottlenecking of Fertiliser Plants
 
 Your company had initially envisaged 25% increase in the capacity of
 both the fertilizer plants at Gadepan through de-bottlenecking schemes.
 The Government has not yet announced the policy for future investments
 in new and de-bottlenecking projects. In view of this, the Company has
 decided to implement the partial de-bottlenecking of the plants which
 will result in energy saving and marginal Urea capacity increase. The
 Scheme is financially viable. The project is under implementation and
 expected to go on stream by April 2009.
 
 4.  Information on Business Segments
 
 The detailed information on the business segments of the Company and
 the respective industries are given in the Management Discussion and
 Analysis Report attached as Annexure G to this report.
 
 The, Food Processing Unit of the Company was disposed off during the
 year.
 
 5.  Joint Ventures and Associates
 
 (i) Indo Maroc Phosphore S.A., Morocco (IMACID)
 
 During the year 2007, IMACID produced 422,229 MT of Phosphoric Acid
 (P2Os) at a daily average plant rate of 1,355 MTPD. Sales during the
 period were 421, 653 MT of Phosphoric Acid.
 
 IMACID earned cash profit of MAD 477.5 million (Rs.  2465.30 million)
 (net of tax) during the year 2007 as against MAD 295.8 million (Rs.
 1551.91 million) in 2006. The Increase in cash profit for 2007 is
 mainly on account of higher production and sales of Phosphoric Acid and
 lower fixed cost. IMACID achieved higher production mainly on account
 of capacity increase from 365,000 MT to 430,000 MT of Phosphoric Acid
 The other achievements of the Company during the year were continuous
 1,311 days accident free operation, new record of continuous operation
 of sulphuric acid plant for 96 days against previous best of 53 days
 and better availability of captive power plant.
 
 IMACID prepaid all long term debt during the year, thus becoming a debt
 free company.
 
 (ii) Zuari Investments Limited
 
 Zuari Investments Limited (a joint venture between Zuari Industries
 Limited and Chambal Fertilisers and Chemicals Limited) is a member of
 both National Stock Exchange of India (NSE) and Bombay Stock Exchange
 Limited (BSE) for equity as well as Futures & Options (F&O) segment.
 It is depository participant with National Securities Depository
 Limited and Central Depository Services (India) Limited. Besides being
 empanelled with Association of Mutual Fund of India for distribution of
 Mutual Fund products, the company is also a member of Over the Counter
 Exchange of India (OTCEI) and a Category-ll Registrar and Share
 Transfer Agent registered with Securities and Exchange Board of India.
 
 Zuari Investments plans to enter into Commodity Broking to complete its
 bouquet of Financial Services and to become a one stop shop for Stock
 Broking, Depository Services, Investment Advisory Services, Insurance
 Broking Services and Commodity Broking Services and is fully poised to
 reap the benefits of a buoyant capital market.
 
 During the financial year 2007-08, the income of Zuari Investments
 Limited from various services was Rs. 881 lac and cash profit was Rs.
 256 lac.
 
 6.  Subsidiaries
 
 (i) Chambal Infrastructure Ventures Limited
 
 Chambal Infrastructure Ventures Limited is a Special Purpose Vehicle
 and a wholly owned subsidiary of your Company. This subsidiary is
 engaged in development and setting up of power projects. It has in turn
 incorporated two wholly owned subsidiaries viz.  Chambal Energy
 (Chhattisgarh) Limited and Chambal Energy (Orissa) Limited for taking
 up power projects in the states of Chhattisgarh and Orissa
 respectively.
 
 Chambal Infrastructure Ventures Limited has signed a Memorandum of
 Understanding with Government of Chhattisgarh on February 1, 2008 for
 setting up of 1100 MW Thermal Power Plant. Application for setting up
 Thermal Powe2r Plant of 1200 MW in the State of Orissa is pending for
 approval.
 
 (ii) CFCL Overseas Limited, Cayman Islands
 
 CFCL Overseas Limited was incorporated as a Special Purpose Vehicle and
 wholly owned subsidiary of your Company for consolidation of its entire
 software business.  As on date, the total investment of your Company in
 CFCL Overseas stands at US$ 46.375 million.  The entire software
 business was restructured during the year 2006-07 and the Companys
 stake in software business was transferred to CFCL Overseas Limited or
 its subsidiaries. CFCL Technologies Limited is a flagship company for
 software business and also a subsidiary of aforesaid Special Purpose
 Vehicle.  As a part of overall restructuring and business plan, main
 focus of software business has shifted from a general purpose IT
 service company to Mortgage related IT business company. The business
 growth was envisaged mainly through inorganic growth and by bringing in
 strategic investors who have expertise in this field.  As a part of
 this road map, the software business acquired Dynatek Inc., U.S.A. and
 Inuva Info Management Pvt.  Limited, India during the year and brought
 on the board New Enterprise Associates, U.S.A. as a strategic investor.
 These alliances will help the business greatly in achieving its plan.
 The business is expected to show improved performance during the
 current financial year.  During trie year, on consolidated basis,
 software business earned revenues of US$ 28.1 million and incurred
 EBITDA loss of US$ 2 million.
 
 (iii) India Steamship Pte. Limited, Singapore
 
 India Steamship Pte. Limited, a wholly owned subsidiary of your
 Company, was incorporated in Singapore in the year 2006-07, considering
 the favourable tax regime in Singapore. Certain activities of shipping
 business are carried out through this subsidiary. This company
 commenced its operations through operating tonnage and confined the
 operations East of Suez for lower risk profile.
 
 Despite the extreme volatility experienced in the tanker segment and
 lower freight rate for most part of the year, India Steamship,
 Singapore has posted a reasonable performance during the year by
 earning a revenue of US$ 9.73 million with a net profit of US$ 63,380.
 
 (iv) Chambal Biotech Pvt. Limited, Singapore
 
 Chambal Biotech Pvt. Limited was a Special Purpose Vehicle of your
 Company for its investments in Seed Potato Business. Chambal Biotech
 had sold in August 2007 its entire holding in Technico Pty. Limited,
 Australia to M/s. Russell Credit Limited (a subsidiary of M/s. ITC
 Limited). As entire downstream investments were sold by Chambal
 Biotech, it has applied to Accounting & Corporate Regulatory Authority,
 Singapore to strike off its name from the register as per the
 provisions of the Companies Act of Singapore.
 
 Your Company has applied for approval of the Government of India,
 seeking exemption under section 212(8) of the Companies Act, 1 956 from
 attaching with its Annual Report, the copies of the Balance Sheet,
 Profit and Loss Account, Board of Directors Report and Auditors
 Report of its subsidiary companies. However, pursuant to Accounting
 Standard 21 issued by the Institute of Chartered Accountants of India,
 Consolidated Financial Statements presented by the Company includes the
 financial information of its subsidiaries, as applicable. The Company
 will make available the Annual Accounts of its subsidiaries alongwith
 relative detailed information upon request by investors of the Company
 or its subsidiaries.
 
 7.  Environmental Protection, Health and Safety
 
 (a) Environment Management
 
 Your Company has established and maintained an Integrated Management
 System (for Environmental, Occupational Health & Safety and Quality)
 based on ISO-14001: 2004 and OHSAS-18001: 2007 and ISO- 9001:2000.
 
 i) Sustainable Development - Your Company is totally committed to
 sustainable development and has completed various environment
 programmes keeping the global issues in mind, viz. Rain Warer
 Harvesting, Ground Water Recharging, Energy Conservation measures,
 Pollution Control, Use of Solar Energy, etc.
 
 Educating and sensitizing the stakeholders mainly employees,
 contractors and customers on the importance of sustainable development
 is a process in continuum.  ii) Waste Management - Your Company is
 managing well designed and operated programmes / treatment facilities
 to control pollution Major thrust is on 3R concept (Reduce, Re-use and
 Re-cycle) of the effluents being generated. As a result, more than 98%
 of the effluents are recycled in the processes.  Waste water is being
 recycled and used maintaining a green belt through a 35 kilometer long
 irrigation network spread all over the complex, which in turn helps in
 saving fresh water.  The Companys lush green campus at Gadepan has an
 environment which consists of fully developed green belt, gardens,
 lawns, shrubs and landscaping. This is considered as one of the most
 beautiful industrial campuses in Rajasthan.  Your Company has adopted
 best practices to manage Solid / Hazardous Waste disposal after proper
 categorization. Saleable items are sold to the approved recyclers. The
 use of polythene bags in the Gadepan campus is strictly prohibited.
 
 iii) Green belt and water consumption- The area surrounding Gadepan
 complex is experiencing a positive change in Ecology due to development
 of a dense green belt/ forest inclusive of over 2.27 lac trees in an
 area of about 213 hectares under a programme named Operation Green.
 This has provided habitat to more than 100 species of birds.  Water
 consumption is optimized through implementation of various conservation
 schemes. The trend of consumption shows a continual improvement.
 During the year, the specific consumption of water was 5.18 cubic meter
 per MT of urea being one of the lowest in the Fertilizer Industry.
 
 The Company has also taken up a project of implementation of rain water
 recharging of wells at different locations around the township in
 Gadepan in a phased manner.  
 
 (b) Safety Management
 
 Safety is accorded the highest priority in your Company.  A strong
 safety and occupational-health programme is in place to ensure the
 safety of men and machine.
 
 Your Company has completed 238 days safe operations without any
 reportable accidents till April 2008.  Your company has initiated
 action to implement Process Safety Management System based on 29 CFR
 1910.119 developed by OHSA of USA in its operations.  It shall help in
 preventing serious process related incidences which can cause loss of
 property and release of hazardous gases.
 
 As a management commitment towards safety of employees, their families
 and contract workforce, the township at Gadepan has obtained OHSAS-
 18001:2007 certification.
 
 Your Company has received 5-star rating of British Safety Council for
 its Occupational Health & Safety Management System at Gadepan.  Your
 company has also taken following safety measures as a part of safety
 campaign:
 
 Quiz competitions, the screening of video films, slogan contests,
 safety exhibitions, etc., particularly during Safety Week and Fire Week
 every year.
 
 Reporting and recording of all near-miss incidents by both Company and
 contractors employees to enable the Company in preventing accidents
 and in identifying root causes.
 
 Rewards for completion of every two million man hours without Loss Time
 Injury, Safe Turn Around and Near Miss Reporting.
 
 i.  Emergency Handling
 
 Your Company has a well-defined Onsite Disaster Management Plan in the
 factory at Gadepan, which clearly defines the duties of all the
 employees during emergency. Regular mock drills are conducted to check
 the emergency preparedness in-house as well as with local
 administration. A formal Mutual Aid Scheme with NTPC-Anta is also in
 place for the emergency handling.
 
 ii.  EHS Audits
 
 Apart from periodic internal audits, external audits are also carried
 out as per schedule. The gaps identified in the audits are corrected
 through an action plan.
 
 iii. Behavior-based safety
 
 Our Company has planned extensive training program on Behavior Based
 Safety as it emphasizes that employees need to take an ownership for
 their safe as well as their unsafe behaviors.
 
 (c) Health & Hygiene
 
 Your Company also accords high priority to hygiene monitoring at work
 place and employees health assessment. The plant and processes are
 continuously upgraded to improve hygiene and health standards.
 Necessary training is imparted to the employees and other workers to
 enhance their awareness towards health related matters.
 
 A well placed medical centre at your company works round the clock to
 provide Health Services to employees, contractors, their families and
 community. Company medical officer conducts regular health awareness
 programs.
 
 Comprehensive Work Environment Monitoring is carried out in-house as
 well as through external agencies on regular basis to prevent any
 occupational disease.
 
 (d) Achievements
 
 Your Company received the following awards for improvement in EHS
 standards:
 
 - Sword of Honour Award from British Safety Council for the Year 2007.
 
 - Gold Safety Award from Green Tech Foundation for Occupational Health
 & Safety Management System for the year 2007.
 
 8.  Corporate Social Responsibility
 
 Your Company is committed towards the development of rural
 infrastructure and to help improve the quality o1 life in the villages
 in the vicinity of the plant at Gadepan Since 1994, your Company has
 taken a number of initiatives in this area in consultation with local
 administration at the village & block levels for the community. Your
 company has paid special attention for providing the basic amenity of
 drinking water in the villages through installation of new tube wells
 and hand pumps and regular upkeep of the existing ones. More pebbled
 roads, gravel roads and culverts over nalahs were built in the
 surrounding villages.  The drive to provide infrastructure for
 elementary education in government schools continues and some more
 class rooms were constructed and boundary walls erected. The Company is
 also motivating school going children in villages by providing school
 uniforms, woolen clothes and scholarship to meritorious students. Free
 mid-day meals are being provided to students at the CFDAV School at
 Gadepan.  Your Company has been working closely with the District
 Administration to provide monitory support when the occasion demands
 for Cultural, Social and Sports activities.  Health Care has been an
 area of priority. The Health Centre in the plant area provides 24 hours
 OPD facilities to all nearby villagers. In addition to this, in the
 event of any serious accidents, ambulance facilities are also provided
 to villagers for shifting of the patients to District Hospitals at Kota
 / Anta.  A Mobile Health Care Unit has been started, whereby a Medical
 Team visits 2-3 villages regularly for providing medical care and to
 distribute free medicines to the villagers.  Periodic Blood Camps, Eye
 Camps, General Health and Hygiene Camps and Family Planning Camps are
 organized for the benefit of villagers.
 
 9.  Conservation of Energy
 
 Your Company strives to make the plants energy efficient to the extent
 possible and continually reviews various schemes to conserve energy.
 The requisite information with regard to conservation of energy,
 technology absorption and foreign exchange earnings and outgo in terms
 of the Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1 988 is set out in separate statements attached
 hereto (Annexure A & B) and forms part hereof.  There is limited
 scope for conservation of energy in Shipping Division in respect of the
 conventional types of ships owned by your Company. Information required
 to be furnished in Form A is not applicable to shipping industry. It
 has no information to furnish in Form B regarding technology
 absorption. Total foreign exchange earning and outgo with respect to
 the Shipping Division has been provided alongwith the other divisions
 of the Company in Form B.
 
 10.  Investor Service Centre
 
 The In-house Investor Service Centre of your Company located at New
 Delhi, continues to provide prompt investor service through quick
 resolution of investor grievances. The motto of high investor
 satisfaction is being pursued through pro-active actions like
 reminders, reaching out to investors at the earliest, etc.  The
 securities of your Company are listed at National Stock Exchange of
 India Limited and Bombay Stock Exchange Limited. The Company has paid
 annual listing fees to these Stock Exchanges for the year 2008-09.
 Pursuant to our application for voluntary de-listing in December 2003,
 Calcutta Stock .Exchange has granted approval for voluntary delisting
 of the shares of the Company vide its letter dated May 7, 2008.
 
 The members are requested to refer to general shareholders information
 given in Annexure E relative to Corporate Governance.
 
 11.  Fixed Deposits
 
 As on March 31, 2008, your Company had 733 depositors with fixed
 deposits of Rs. 217.80 lac. 96 depositors have not claimed their Fixed
 Deposit amount of Rs. 24.43 lac as on that date. However, 30 depositors
 have since claimed/ renewed their deposits of Rs. 8.98 lac. The
 remaining depositors are being advised at regular intervals to claim
 their deposits.
 
 12. -Personnel
 
 Information in accordance with section 217(2A) of the Companies Act, 1
 956, read with the Companies (Particulars of Employees) Rules, 1 975,
 forms part of this Report and is attached hereto as Annexure C.
 
 13.  Directors
 
 The Board has nine non-executive directors and a Managing Director.
 Three directors namely Dr. K. K. Birla, Mr. H. S.  Bawa and Mr. R. N.
 Bansal are due for retirement by rotation at the forthcoming Annual
 General Meeting and are eligible for re-appointment.
 
 Other information on the directors including those retiring by rotation
 is provided in the Report on Corporate Governance annexed to this
 Report as Annexure E.
 
 14.  Auditors
 
 The Notes on Accounts read with the Auditors Reports are self
 explanatory and therefore, do not call for any further comments or
 explanations.
 
 M/s. S. R. Batliboi & Co., Statutory Auditors and M/s. Singhi & Co.,
 Branch Auditors of Shipping Business of the Company pursuant to Section
 228 of the Companies Act, 1 956, are due to retire at the conclusion of
 the ensuing Annual General Meeting and being eligible, offer themselves
 for re- appointment. The above re-appointments, if made, will be in
 accordance with the provisions of section 224 (IB) of the Companies
 Act, 1 956.
 
 15.  Corporate Governance
 
 Auditors Certificate on compliance with the conditions of Corporate
 Governance and separate reports on Corporate Governance and Management
 Discussion and Analysis are enclosed as Annexure - D & E and G
 respectively.
 
 16.  Directors Responsibility Statement Your Directors hereby report:
 
 a) that in the preparation of annual accounts, the applicable
 accounting standards have been followed alongwith proper explanation
 relative to material departures.
 
 b) that 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 as at March 31, 2008 and of profit and loss
 account for the period ended March 31, 2008.
 
 c) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1 956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 d) that the Directors have prepared the annual accounts on a going
 concern basis.
 
 17.  Consolidated Financial Statements
 
 In accordance with Accounting Standard 21 - Consolidated Financial
 Statements, the group accounts form part of this Report & Accounts.
 These group accounts also incorporate the Accounting Standard 23-
 Accounting for investments in Associates in Consolidated Financial
 Statements and also Accounting Standard 27 - Financial Reporting of
 interest in Joint Ventures issued by the Institute of Chartered
 Accountants of India. These group accounts have been prepared on the
 basis of audited financial statements received from subsidiaries,
 associates and joint venture companies.
 
 18.  Acknowledgements
 
 Your Directors wish to place on record their appreciation of the
 assistance and co-operation that your Company received from the
 Department of Fertilisers, Government of India, Government of Rajashan,
 Financial Institutions, Commercial Bank;,, Stakeholders and all others
 whose continued support has been a source of strength to the Company.
 Your Directors also wish to place on record their sincere appreciation
 of the devotion and commitment of every employee of the Company.
 
                                            By order of the Board 
 
 New Delhi                                          K . K.  Birla
 May 15, 2008                                            Chairman